01 February 2022
Unexpected parallels between philanthropy and taxation
At first sight, taxation and philanthropy have little in common. Whereas taxation is a coercive mechanism, through which states levy revenue and then reallocate it according their policy objectives, philanthropy is a voluntary and altruistic way of redistributing private wealth. You have no choice but to pay taxes, whereas you have every right not to give anything to charity.
(Author: Giedre Lideikyte-Huber, Senior Lecturer, Geneva Centre for Philanthropy)
Those seemingly irreconcilable differences between the domains diminish once you start looking deeper. In fact, the majority of states in the world encourage philanthropic actions with certain forms of subsidies, which are often in the form of taxes. For instance, donors might be able to deduct their charitable gifts from their taxable or income taxes, or receive similar tax relief in other forms of state subsidies. This inevitably raises multiple questions, which go far beyond the realm of law that puts such tax rules in place. Why should the state sponsor private philanthropy? Is such delegation of budgetary powers compatible with the principals of a democratic state? Are such tax measures efficient, do they increase philanthropic giving? Could we really say that a gift is altruistic if it is motivated by (sometimes very scrupulous) tax planning? In this case is it not the state that is being philanthropic, the philanthropists being egoistic?
The Routledge Handbook of Taxation and Philanthropy, edited by Henry Peter and Giedre Lideikyte Huber of the Geneva Centre for Philanthropy, provides the first comprehensive multidisciplinary analysis of the interaction between these domains, seeking answers to those complex academic and practical questions and encouraging further discussions. Analysing this heterogeneous topic, it resembles academics’ contributions from multiple scientific disciplines, such as philosophy, law, sociology, economics and political science.