25 November 2005

Charitable Deduction Revisited.

I've mentioned growing doubts about the charitable deduction before at this site. If you want facts and figures, the Tax Profs Blog has a digest of a report from the Tax Foundation summing up the concerns. The summary for those who don't have time to read it:

From the perspective of economic efficiency, it turns out it's hard to justify the current size and scope of the federal charitable deduction. Most 501(c)(3) public charities now benefiting from the deduction are neither charitable, in the sense of relying mostly on altruistic gifts, nor are providers of what economists call "public goods." . . . . the charitable deduction's benefits are highly regressive [and] most 501(c)(3)s actually rely mostly on program revenues—e.g., tuition from college students or admission fees at art galleries—and government grants for funding, casting doubt on the notion that they wouldn't be privately provided in the absence of a federal tax subsidy for them[.]

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