When asked what he’d done with all the money he’d earned, former Manchester United star George Best replied that he’d spent a fortune on women, booze and fast cars. “The rest,” he said, “I just wasted.”
No such prodigality from the three dozen billionaires who’ve agreed with Bill Gates and Warren Buffet to give away at least half of their fortunes and get by on what’s left. The initiative is expected to bring in $600 billion eventually, about twice what Americans gave to charity last year.
Some of it would have been given anyway according to an interview with Buffet in the New York Times. He says the real value of the pledge is in the example it sets and the sentiments expressed in the letters posted on the Giving Pledge web site.
If you think that charity is a good thing but would like a more convincing example than somebody who explains in his letter to the Pledge that he only has three luxury homes, try imitating the poor. According to the OECD study Growing Unequal? Income Distribution and Poverty in OECD Countries, the economic expansion that allowed the billionaires to make so much money hasn’t benefitted everybody. In fact, “the change has been equivalent to taking $880 from each of the poorest half of the population, and giving it to the richest half”.
What are they going to do with their philanthropy money? Education and health care top the list of intended beneficiaries. You might object that such basics should be a right, and not have to depend on charity and the whims of the rich.
Various sets of data suggest where other sources of funding could be found, even in poor countries. OECD Secretary-General Angel Gurría has pointed out that developing countries lose to tax havens almost three times what they get from developed countries in aid.
Christian Aid estimates that the sums being lost to tax evasion could save the lives of 350,000 children each year if made available to programmes fighting poverty and disease.
OECD countries suffer from tax dodgers too. According to a 2009 report from the US Internal Revenue Service, the tax gap – the difference between tax owed and tax paid – was around $345 billion in 2005, the most recent estimate. After subtracting revenue obtained through enforcement actions and other late payments, the IRS estimated the net tax gap at approximately $290 billion. The OECD says that tax evasion deprives other member governments of billions of euros a year too.
Charities do vital work that wouldn’t be done otherwise. But in a stronger, cleaner, fairer economy, they wouldn’t have to do it
Outcomes of the first meeting of the Informal Task Force on Tax and Development