The NYT reported on a new philanthropic trend among the wealthy, where rich people try to use their money to deliberately influence public policy in part by funding pilot programs that can serve as a model for larger public programs. At one point the article refers to funding for various education projects in New York and Newark and told readers:
"Officials in New York and Newark say the money from private sources will not replace existing public programs, but will instead allow rapid experimentation with new approaches to old and seemingly intractable problems, at no cost to taxpayers."
Actually, the money that wealthy people donate to philanthropies does carry a cost to taxpayers. It is deducted from their taxable income or the estates that they would pass on to their heirs. Depending on the relevant tax rate, the dollars contributed to philanthropies by the wealthy could lead to losses of government revenue of as much as 50 percent of the money contributed.
It is entirely possible that most charitable organizations promote the public good to a sufficient extent to warrant this sort of revenue loss, however it is inaccurate to imply that these contributions are costless to taxpayers. Everyone else faces a higher tax burden as a result of the tax savings that the wealthy receive from their charitable contributions.