Can someone explain why the philanthropists are complaining?

[claig]

I don't get it. Why should the tax payer subsidy the billionaire philanthropists by making contributions to charities tax exempt? If we donate to Comic Relief, it comes out of taxed income doesn't it? I don't understand it and may have got it wrong. Can someone explain?

"If these Fat Cats are only giving to charity to avoid tax..."

Please explain to me how does this work. If I give to a charity 100GBP and claim 20% tax back through my tax return it is still net 80GBP GIVEN AWAY. Same if my marginal tax rate is 40%. Where is the tax avoidance?

Sorry, wrong question (posted too soon). Not where is the tax avoidance, but where is the monetary gain from the tax avoidance by the individual concerned?...

There is a current agreement between the public and the state that the state does not tax charitable donations. What is wrong with it provided that the charity is genuine? In our society state does not provide for all ills, it is only fair and responsible to encourage private support of some.

I do not believe in collectivism. Societies built on this model did not flourish anywhere in the world. USSR did not recognize any use for charities, because supposedly all was o'right there. Is this what we would like to built here?

But Osborne does not want a USSR model. He wants charities, but it seems he also wants to remove some of the philanthropists' tax relief. Going by the comments of the Daily Mail reader, he seems to have wide support.

Bemybebe, I agree the USSR certainly didn't flourish but you need to understand the forces of global capital and the fact that the Anglo-American economic model was foisted on countries from Chile to other asian and african states who accepted help from the world bank. These nations many of whom traded with the USSR were denied the right to continue to do so. (thatcher/reagan evil axis ) (world bank, new leader will be........wait for it.........another american.........ta...da.

I'm still struggling to see why Osborne would make giving less atractive as an option whilst at the same time changing the tax rules to encourage investment in social enterprise. I think the agenda can only be about the wealthy making money rather than giving money??????????

I had heard that there will be some sort of Social Enterprise bank which will take money from dormant accounts and possibly from elsewhere and loan it to social entrepreneurs who have good ideas to improve society. But what tax changes has he made to encourage investment in social enterprise and if they do exist wouldn't the philanthropists be able to invest in these?

"But Osborne does not want a USSR model. He wants charities, but it seems he also wants to remove some of the philanthropists' tax relief."

Exactly. He is dipping into charities pockets, whether it is intended or not is a different issue. As someone who gave and gives to charities on a regular basis, I know that I don't take into account the tax relief when making my contributions. The thinking goes like this: I can afford to give 100GBP to XYZ, so I either give them 100GBP and sign a GiftAid or give them 125GBP through payroll giving. I don't give hundreds of thousands, but I am sure similar thinking lies behind the larger donations (if not - please explain why not).

By taking the tax relief away, charities will be loosing out because majority of givers give how much they feel is reasonable/affordable given their personal economic circs.

The minis message I do not get at all.

USSR failed not because of Anglo-American economic model or the World Bank and third-world trading. It failed because the state decided it to be the only agent of generating and distributing wealth. And it was dreadful at it. USSR with all its vastness and natural resources and world-class education system failed because it could not cope with supporting an efficient economy despite all these advantages, whilst removing all avenues for private initiative from its citizens.

"I think the agenda can only be about the wealthy making money rather than giving money??????????"

Hmm. This I do not get either. What does it mean?

"will take money from dormant accounts"

These dormant accounts are private property, it is even legal to "take" from them??

The government makes the laws. If they say it is legal, then it is legal as far as I understand it.

'I am sure similar thinking lies behind the larger donations (if not - please explain why not).'

But why then are some of the philanthropists, the great and the good, some of the pop stars and some of the film stars saying that they will stop giving to charities if tax relief does not remain? They are 'philanthropists', the rest of the public are not saying that they will stop their donations.

Not quite as simple as that.

Government does not make laws for starters. Parliament does.
Changes to these laws will have a very wide consequences.

"But why then are some of the philanthropists, the great and the good, some of the pop stars and some of the film stars saying that they will stop giving to charities if tax relief does not remain? They are 'philanthropists', the rest of the public are not saying that they will stop their donations."

Firstly, please do not ask me to comment about actions of people I do not know.
Secondly, if I knew a more efficient way to help a charity of my choice (and most rich individuals have means and ways to explore efficient ways of doing things), I would certainly do it if I felt this is the way to go.

Also, if I was supporting a charity A and a charity B and felt that although charity B is important, A is more needy of my money and the changes will result in it getting less, I would consider cutting donation to B down or altogether to make up the shortfall to A... it is not rocket science or Dr Evil mentality...

"I think the agenda can only be about the wealthy making money rather than giving money?????????? I heard on the radio a few weeks ago about changes to taxation in relation to investors putting money into the "big society bank" and Claig is correct about the dormant accounts. Banks have long had the ability to close dormant accounts and I don't think a change to the law has been made because no change is needed.

The issue with tax avoidance stems from the fact that wealthy individuals and businesses are able to give money from pre-tax income thus avoiding tax. Whereas most of us who give a little pay tax through p.a.y.e and then contribute from our taxed income. The charity asks you to gift aid so that is can claim the tax you paid at source. Most people could if they wanted claim it back but they don't instead they allow the charity to claim it.

Why are some people claiming they will give less? notice these are only the people that gain from giving money from pre-taxed income.

Yes, I think mimimathsmouse asks some good questions there.

I'll have a snoop around the net (as you do) because I think (i might be mad) that if philanthropic behaviour can be re-directed through changes to taxation that encourage investment in social enterprise, this fund will both benefit the wealthy who earn interest/cut tax and the social enterprise "companies" such as some of the big american companies who are muscling in on health and welfare, others like atos etc,,,

Banks make profits. Will the Big Society type bank make a profit and who will get that profit, will it be the public or private individuals?

'Banks make profits'

That's not strictly true. Sometimes they make losses and sometimes the public bails private banks out.

www.cityoflondon.gov.uk/NR/rdonlyres/1FC8B9A1-6DE2-495F-9284-C3CC1CFB706D/0/BC_RS_InvestorPerspectivesonSocialInvestment_forweb.pdf

This document is quite interesting, haven't had time to read it all, thought I might share though if anyone is interested. It was written in 2011 and sets out the idea of bringing together investors and social enterprise. Claig your right, the real worry isn't just about investors making money, they will and service provision will suffer/will cost more ultimately but that there seems to be also some suggestion that these bonds will be underwritten by government. So yep when it goes tits up, like the banks, we will have to bail them out.

The report contains words like 'investment', 'market returrns', 'illiquid', 'intermediaries', 'investors', 'ethical' etc.

So it looks like there may well be money in them thar social ills. New markets, new 'innovative' products. Let's just hope that it will not lead to more Southern Crosses and more well-heeled people telling us that if the public doesn't stump up for their bonuses, then they will leave the country for pastures new.

Some people say we are living in the Age of Aquarius, we know we are living in the Age of the Progressive, but will we also live in the Age of the Philanthropist. Either way, the future seems a little more privatized and precarious.

Oh and of course it contains the phrase "sustainable development", which will bring the progressive on board

Over time, the sector aims to provide investors with an increasing number of initiatives offering near market level financial returns
so now it's about investors profiting not from giving.
Where investors perceive a deal as attractive but risky, the possibility for early stage underwriting, guarantee or different return structures across investors may provide a solution. In such structures, sources of capital with different social and financial objectives are ?blended? in order to secure greater overall flows of funds. We see these deals being implemented on an international basis. Further use of pooled products could support public sector spin-outs, help to diversify the risk across the portfolio
and that is what got us into this mess with the banks, sounds a little familiar........subprime mortgages?????
It's the same story with climate change, its about creating a new area of investment and therefore private profit and socialised risk to the tax payer.
Very sad indeed that wealthy individuals no longer give because they want to share in their luck and feel responsible, instead they look at a beggar on the street and say, hey, if I give him a dollar, can I make some money out of this.

It just occurred to me, on a quick scan of the report, I didn't find the elsewhere ubiquitous feel-good word 'progressive'.

So I have just searched the report to see if it does appear. Have no fear, it's here.

'The City Car Club and Social Impact Bonds are examples of
these ?progressive? initiatives and further innovations are on the way.'

But only once does it appear.

Well when we are old and sitting in our old care homes, thanking them profusely for 'saving the planet' for us, let's hope we will not look back on 'social enterprise' with regret.