Why Not Tax Charity?

Gleckman wants to reform the charity deduction:

Because only about 30 percent of taxpayers itemize, the vast majority of people give without getting any tax benefit, and thus would be indifferent to any form of deduction cap. For instance, TPC estimates that 80 percent of those making $40,000-$50,000 get no deduction for charitable giving (though many do give).

The congressional Joint Committee on Taxation figures that of about $180 billion in deductible contributions in 2011, the 3 percent of taxpayers making $200,000 or more gave nearly 45 percent.  TPC estimates that this group gets 55 percent of the total tax benefit. Does the tax subsidy increase giving? The research is mixed. The latest studies find the effects are small, especially over the long run. 

I think every single tax subsidy should be forced to justify its existence as our new budgetary reality sets in. Even for charity. A cleaner tax code is one critical part of restoring the popular legitimacy of the capitalist system. That’s why conservatives in particular should like this approach – as many do. I prefer it to raising rates in general, although I think the Clinton top rate is all bit essential if we are to move on to this vital, structural reform.