Posted on 10/17/2002 4:50:58 PM PDT by knighthawk
Revoking the registration of the Magen David Adom (MDA) as a charitable organization -- as proposed by the Canada Customs and Revenue Agency and upheld by a majority decision of the Federal Court of Appeal -- is an outrage. The MDA, the Red Star of David, is Israel's Red Cross. It's easy to agree with Edward L. Greenspan and David C. Nathanson, the eminent Canadian lawyers, who argued in these pages last week that the Federal Court's "judgment is wrong and should not stand."
A withdrawal of charitable status makes donations, on which non-governmental organizations like the Red Star of David depend, non-deductible. While donating to the Red Cross or Red Crescent is tax-deductible, donating to the MDA isn't. There's no doubt in my mind that impeding the fundraising efforts of Israel's equivalent of the Red Cross is politically motivated. It stems from an anti-Israeli bias at best. At worst, it stems from an anti-Semitic bias. On the part of some Canada Customs and Revenue Agency officials, that is; on the part of the Federal Court it may just stem from a perpetual bias in favour of officialdom.
As long as foreign charities are tax-deductible, the MDA should be tax-deductible as well. It's an entirely different question, however, whether foreign charities should be tax-deductible in the first place.
Frankly, I'm not even sure if domestic charities should be tax-deductible. The word "charity" denotes a benevolent gift. It's the very opposite of a tax, which is a duty imposed on an individual by the state. A gift is extended as an act of voluntary munificence. There's a lot to be said for people being able to designate where their taxes go, but it's hardly charity.
Strictly speaking, a charitable donation is after-tax by definition. A deductible donation is simply a tax that a taxpayer is permitted to allocate for a specific purpose. Letting taxpayers allocate some (or most) of their taxes is great -- I would allocate most of mine to Canada's Armed Forces if I could -- but confusing allocation with charity only promotes fuzzy thinking.
It's quite true that if donations weren't tax-deductible, some worthwhile charities would have to close shop. So would some cultural and educational institutions, from art galleries to colleges. This may be a good reason to continue the practice as a matter of policy, but not to mistake tax-deductible donations -- whether of cash, or in the form of paintings to galleries or private papers to university libraries -- with "gifts." Gifts they're not. Prominent or wealthy people usually make more money when they "donate" their manuscripts, correspondence, or art collections to institutions than they would if they bequeathed them to their heirs or sold them on the open market, especially if they had to pay inheritance or capital gains taxes on the proceeds.
In any event, while there may be valid reasons for preserving the tax-deductible status of Canada's own charities and institutions, there's no comparable reason for preserving the tax-deductible status of foreign charities. If a person wishes to give money to the Red Star of David, the Red Crescent, The Metropolitan Opera of New York, or the French Foreign Legion, fine. Let him do it from his own funds, which is the money he has left after he has paid his taxes.
People may have a host of personal reasons, having to do with their heritage, politics, or whatever, for wanting to support foreign institutions. That's OK; it's a free country; they can do what they like; but there's no reason to distribute the cost of their charitable impulses among Canada's taxpayers. Canadians are taxed for foreign aid anyway through the government. They shouldn't have to contribute through the personal choices of their fellow citizens as well.
An exception to this would be those foreign charities that offer the same benefits to Canadians as to their own citizens, such as the famous Seeing Eye school in New Jersey. A blind person in Canada will get a guide dog and full training at the Seeing Eye in Morristown, N.J., the same as an American. Naturally, donations to such a charity should continue to be tax-deductible.
The matter goes beyond collecting revenue. Removing the tax-deductible status of all foreign charities would accomplish another kind of saving. At present our security and judicial authorities are spending vast amounts of energy and funds trying to separate militant (or at least highly politicized) organizations from genuine charities -- not always successfully. This time our officials wrongly concluded that the MDA isn't a genuine charity. In the past they've wrongly concluded, at least for periods of time, that organizations supporting such entities as Hamas, Hezbollah or the Tamil Tigers were charitable.
Relieving officials from the necessity of having to make such judgment calls would save them from their own mistakes. We shouldn't put an undue strain on the competence or sympathies of politicians and civil servants, or, for that matter, judges. At best they will get it right, and Canadian taxes will support genuine foreign charities with scant benefit to Canadians. At worst, they will get it wrong, and Canadian taxes will support genuine foreign terrorists.
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