If giving to a charity was a non-taxable event, but the charity had to pay taxes on everything it spent those contribution on, the the charity would be losing compared to the current system.Under the current system, the money most people give to nonprofits has already been tax. Under the FairTax, the money given to nonprofits hasn't been taxed...yet. People would just have to give more (easier to do now that they are getting their gross pay) to allow the nonprofit to afford the FairTax.
Although the majority of PEOPLE that give money to charities do so from after-tax income because they don't itemize deductions, I suspect the larger contributions ARE from untaxed income because the larger contributors do itemize.
If it isn't worth itemizing your deductions, your marginal tax rate is unlikely to be over 23%, even including SS/M. So this crowd is not going to be able to donate 30% more than they used to.
The itemizers are already donating untaxed dollars, so they see no benefit on the donation side.
If the charity then had to go and pay 30% more for all their operating expenses, there is no way they would come out ahead. Yet the FairTax is touted -- in whitepapers, FAQs, and even the presentation they gave to the Tax Reform Panel last year -- as BETTER for charities than the current system.
It just doesn't add up to your interpretation. I'd be likelier to believe you are misinterpreting the links to the NIPA data -- or even that Karen Walby made a mistake in including that consumption from the base. I posted a message to her last night and provided a link to your post here. Hopefully she'll respond.
Nonprofits of the charitable, religious, and a few other types will not have to pay the FairTax on things they purchase for "for business purposes" (and yes, that means churches buy things, in effect "for business purposes" in spite of the fact they are not a business in the normal sense). As I've told you frequently the business purpose of a church is helping people find God and bringing comfort and sustenance.
The explanation is:
Organizations that meet the above criteria are issued a “qualification certificate” upon application to the state sales tax administering authority (on a form prescribed by the Treasury Department). Tithes, dues, contributions, and similar payments to qualified not-for-profit organizations are not considered payments for taxable property or services subject to tax. Individuals make such payments or contributions to qualified not-for-profit organizations tax free. If churches or not-for-profit organizations provide taxable services at no charge (running a soup kitchen for the poor, for example) these services are not subject to tax. If they provide taxable property or services in connection with contributions, dues or other payments to the organization, then the provision of the taxable property or service is treated as a taxable purchase at the fair market value of the taxable property or services. Example: An organization sells tickets to a dinner to raise funds for the group and charges $100 per ticket which includes a $25 dinner and a $75 donation. The organization has to collect tax on the $25 dinner portion of the ticket. Also, the sale of Bibles by a church is taxable. The not-for-profit organization is responsible for collecting the tax and filing tax reports to the state sales tax administering authority. Taxable property and services purchased by a qualified not-for-profit organization “for business purposes” are not taxable. So, in other words, purchases for business purposes are not taxable and sales to consumers are taxable. However, the organization must present its qualification certificate to the seller when making a purchase in order for the sale to be tax exempt. This is a narrower definition of not-for-profit organization than under current law. For example, the National Football League is not viewed as not-for-profit under the sales tax but is under the income tax.""“Qualified not-for-profit organizations” receive favorable tax treatment under the FairTax. These are organizations that are organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes; as a civic league or social welfare organization; as a labor, agricultural or horticultural organization; as a chamber of commerce, business league, or trade association; or as a fraternal beneficiary society, order, or association. No part of the net earnings of not-for-profit organizations can serve to the benefit of any private shareholder or individual.
Note also that there are also some sorts of "not for profit" entities (the NFL was cited in the quote but there are others) that do not qualify with churches, etc. You've had this stuff pointed out to you before, Nightie.