Monday, December 03, 2012

Dealing on dedctions

Paying for charitable giving

By Fred Hiatt, WashPost, Published: December 2

With tax-deductible donations in danger, the nonprofit world is mobilizing. Its lobbyists and supporters will be blanketing Capitol Hill this week. “Take action,” urges the Web site of Independent Sector, an organization of philanthropies and philanthropists. “Tell Congress not to limit the charitable deduction.”

Their entreaties are not falling on deaf ears. In a paper explaining why income tax rates must rise — why closing loopholes won’t raise enough money — two White House economists, Gene Sperling and Jason Furman, argue that it isn’t “plausible” to assume that Congress would eliminate the charitable deduction.

From a political standpoint, this is understandable. Every congressional district has churches, museums, cancer societies, colleges and other nonprofit institutions that will fight for the tax incentive that helps support them.

At first blush, it seems to make policy sense, too. The rich fabric of America’s civic life, from Boy Scouts to community orchestras to soup kitchens, is the envy of the world. Its diversity reflects in part how much it depends on private givers with diverse interests and motives, and not just on the government. Their giving is encouraged by the charitable deduction, enacted in 1917, just four years after the income tax itself. The deduction lets people feel they are beating the system even as they practice virtue.

(More here.)

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