April 11, 2017 Reading Time: 2 minutes

What if progressives could provide health insurance to millions, send millions more to college, and keep organizations like the National Endowment for the Arts and PBS fully funded? What if those moves couldn’t be fought by the Trump administration? Private giving is often neglected in our heated and polarized debates about what the government should and shouldn’t do. But the impact of millions of small and large donors coming together voluntarily can be enormous.

Consider the following thought experiment: During the election, Bernie Sanders and Hillary Clinton proposed higher income tax rates for high earners than Donald Trump. Those high earners who voted for them demonstrated they were willing to pay a certain amount of money in exchange for higher government spending on causes like healthcare, education, and environmental protection. What if high-income Sanders and Clinton voters privately pooled the extra income tax they would have paid had their candidates won? Suppose further than Sanders and Clinton voters earning less than $250,000 kicked in 1% of their income. A back-of-the-envelope calculation yields a total annual figure of about $48 billion. That’s $2 billion higher than all the donations in 2016 to the top 100 U.S. charities combined—and $8 billion higher than the entire endowment of the Bill and Melinda Gates Foundation, collected in a single year.

My point comes with several qualifications. This calculation is very rough, meant to show the order of magnitude of these extra tax funds rather than an exact number (I’ll have a link explaining my calculations here soon). And such giving would crowd out some existing charitable donations. I’m also not advocating that these funds all be directed to a single organization: any organization of this size would be frightening, regardless of its goals.

What could this money buy? At national average rates, it could pay yearly health insurance premiums for 7.5 million people, give 1 million four-year scholarships to public universities, and leave more than enough to keep the NEA, the National Endowment for the Humanities, and PBS fully funded. All this spending could happen without a congressional budget fight, amendments for special interests like the insurance industry, the threat of a presidential veto, or the threat of a future repeal. The worst that progressives’ political opponents could do is ignore the effort.

Many would find it unfair that this money would come from only those choosing to give, not everyone. Others would perceive risk in relying on private giving year after year instead of government law. But the back-and-forth of our recent presidential elections suggests whatever that risk may be, anything that can be repealed is also insecure.

Finally, consider the following scenario: instead of ensuring the ongoing dominance of a small number of huge non-profits, this money could fund a plethora of small non-profits, working on the ground with those in need, experimenting, and letting the best solutions emerge. I’d guess that many people who didn’t support either Democratic candidate last year would contribute in that scenario as well.

For some people, relying on private giving rather than government action is anathema. But they should consider whether much has been accomplished by relying on government action in the past few decades, and how much is likely to be accomplished soon. Increased private giving could make a large impact, and potentially be something on which many more Americans could agree.

Max Gulker

Max Gulker

Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.

Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.

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