A chapter on "Charity in India" by Rajendra S. Kulkarni and Ravindra S. Kulkarni in The Handbook of Hindu Economics and Business , edited by Hrishikesh D. Vinod and published by createspace.com (ISBN 9781483980881), 12 April 2013 and discussions with them prompted me to suggest a possible index of measuring giving by any entity. My first attempt is posted below.
The Giving Index
The Giving Index (TGI) is designed to know and rank giving
to other than your own progeny, and immediate blood relatives, their children
and grandchildren. All or most humans do this to some extent as extension of
themselves serving the self-interest as the central driving force of why humans
behave the way they do as defined by the globally known and recognized moral
philosopher and father of modern economics Adam Smith.
TGI measures ten attributes of giving entities. Entities can
be individuals, families, business, financial, social, cultural, religious
groups, nations or international bodies.
Each entity can be given a maximum of 100 points which would
signify being on the top of the TGI. The other extreme at or near zero points
would mean a non-giver best. TGI can
allow comparisons within and across entities to know who thinks more or less of
the well-being of others and does something to improve it with its own
financial resources as if the beneficiaries are one’s own extended relatives.
The more distant and different a group one gives to reflects expanding embrace
of the notion of a global family. This view of globalization of one’s life and
living comes close to the thinking expressed in Vedanta literature of ancient India
which says “The Whole World is One Family”.
Thus, the self-interest of Adam Smith not only leads to
maximization of the welfare of a society or the world through trade and
investment, giving to others out of one’s economic and financial success also
brings the whole world together as a human family, so giving is as much of
self-interest (or should be) as maximization of one’s income and wealth.
The ten measurable attributes are:
1.
Percentage of Wealth as measured by Net Worth
given.
2.
Percentage of Income measured as Gross Annual Income.
3.
Percentage of Total Income tax paid to local,
national and international government bodies.
4.
Percentage of Total wealth tax paid to national
and international bodies.
5.
Percentage sales tax paid to local, national and
international bodies.
6.
Percentage excise and other taxes paid to local,
national and international bodies.
7.
Percentage savings including contributions to
public and private retirement plans as well as after tax personal savings.
8.
Percentage Tax-deductibility of charitable
contributions in the country of residence of the entity.
9.
Percentage of people in any entity giving in the
country of residence of the entity.
10.
Percentage tax rate prevalent in a society,
taxing entity such as local, state, national, and international..
Each of the ten
attributes can be given 10, 9, 8,7,6,5,4,3,2 and 1, now we define the numerical
value to be given to each attribute. Wealth and income numbers are in US
dollars.
Wealth: 10 percent
given =10 points, 9 percent given =9 points, 8 percent given = 8 points, 7
percent given = 7 points, 6 percent given =6 points, 5 percent given =5 points,
4 percent given= 4 points, 3 percent given=3 points, 2 percent given= 2 points
and I percent given =1 point. Less than 1 percent gets zero point.
Income: the same
percentage giving and points earned rules.
Income tax paid:
the same rules as applied to wealth and income.
Wealth tax paid:
the same rules as in income.
Sales tax paid:
the same rules as applied to income and wealth.
Excise and other
taxes paid: the same rules as applied to income and wealth.
Savings: the same
rules as applied to income and wealth.
Tax-deductibility:
100 Percent deductibility= 10 points, 90 percent=9 ….10 percent deductibility
=1 meaning tax authorities are not encouraging giving through the tax code.
Giving culture:
If everyone in the entity gives something then the entity gets 10 points, if 90
percent give then 9 points, if only 10 percent give then 1 point.
Tax rate: Lower
the tax rate higher the points for the taxing environment i.e. a country,
state, etc.
An example:
Warren Buffet and
Bill and Melinda Gates would get the following number of points in the ten
attributes:
Percentage of
wealth given = more than 10 percent so they get 10 points.
Percentage of
income given is more than 10 percent so they get 10 points.
Percentage of
income tax paid is more than 10 percent so they get 10 points.
Percentage of
wealth (capital gains) is more than 10 percent so they get 10 points.
Percentage of
sales tax is less say 8 percent so they het 8 points.
Percentage of
excise tax say is less than 7 percent so they get 7 points.
Percentage tax
deductibility in the US is 100 percent or public charities so they get 10
points.
They all give in
their own group as a family so they get 10 points.
Income tax rates
(especially average effective rates) in the US are lowest so people can give
more so they get 10 points.
Thus, Warren
Buffet gets 95 points on the charity index of 100 and so do Bill and Melinda
Gates.
How about you the
reader? Calculate your own number and
see where you are on TGI!
