Discouraging donations

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Discouraging donations


President Park Geun-hye made a rare appearance at a golf tournament when she attended the 11th Presidents Cup in Songdo, Incheon, west of Seoul, the first time for the tournament to be held in Asia. It was probably also the first time the president set foot in a golf club since taking office three years ago. Presidents of United States, Australia and Canada all joined the galleries when the biennial showdown between American and international professional golf players took place in their countries. Unusual attention is given the game not only because it brings together all the top players in the world, but also because of its goodwill.

The Presidents Cup was born of an idea from the early 1990s by the U.S. PGA Tour, which hoped to expand beyond American territories. It wanted to target the burgeoning Asian market, but lacked money to draw top players. PGA Tour commissioner Tim Finchem came up with the idea of a charitable cause. The players would be paid for their flights and lodging but not for their participation. They could take home five sets of team attire and some golf gear. The money put up by sponsors went straight to charity. The winners could have donations made in their names. The result was overwhelming. Golf is referred to as the gentlemen’s game and charity was the best way to show gentlemanly ways.

Through their regular participation, golf players joined the list of top philanthropists. Phil Mickelson, who has never missed a game since the first in 1994, is a big name in the charity world. He donates $100 for every birdie and $500 for an eagle. His donations have exceeded $1 million. He believes the Presidents Cup is an event where the world’s top players become one through the act of charity. Watching the 45-year-old golfer prove his worth at the Jack Nicklaus Golf Club Korea with an eagle from a fairway bunker, I instantly thought of $500 added to his charity tally. Adam Scott also launched a charity foundation after he participated in the Presidents Cup. The highest contribution is doing a good deed through your work, Webb Simpson once observed, calling the Presidents Cup the archetype for such a notion. Winning often doesn’t matter in the competition because every player gets to go home feeling good about his or her charitable acts.

We may envy the noble philanthropist practices of advanced societies. The tradition of donations stems from advanced systems, mostly the tax codes. Donations by professional golfers are tantamount to prize money. In the U.S., a contribution to charity is deductible up to 50 percent against a person’s annual individual income tax. This year’s tournament would have generated a donation of $180,000 per player. For example, if Mickelson gave that to a children’s charity, he would save a lot of the tax he has to pay on his annual income of $2.15 million. He was doing charity with his tax liability.

What about our own? Bae Sang-moon, who led the international team rally at last week’s Presidents Cup, would be refunded just 25 percent on his donation here. If he donates 200 million won at home, he is eligible for a tax deduction of 50 million won - much less than American players enjoy. Economically, it would be wiser for Bae to donate his prize money to overseas charities. Since he earned $2.59 million from the PGA Tour this year, he can have his IRS tax bill lowered if he makes donations to American charities. He, however, may opt for local charities since he has suffered bad publicity at home for allegedly trying to evade mandatory military service.

The Presidents Cup has raised awareness of the low level of charity culture in Korea. Through tax code tweaks in 2013 and 2014, the government greatly reduced tax deductions for large donations to pull in more revenue. The government assumed the rich were using charities in order to pay less tax. Tax revenue this year would increase by 305.7 billion won while donations would be shaved by 2.38 trillion won. The government will now have to spend more tax money for social causes due to reduced donations. If Mickelson had been playing at a Korean Tour, would he have put up $100 for every birdie? What about Bae? Would he have second thoughts about where to donate his share if he did not have the military service issue to worry about? I am not so sure.

*The author is an editorial writer of the JoongAng Ilbo.

by Yi Jung-jae

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