the not-so-charitable deduction
I’ve got a new paper out on the federal income tax deduction for charitable gifts. I toss tax subsidies for charitable giving into the gristmill of price theory. Here’s what came out the other end:
From the perspective of economic efficiency, we find that it is hard to justify the current size and scope of the federal charitable deduction. Most 501c3 charities now benefiting from the charitable deduction are neither charitable, in the sense of relying mostly on altruistic gifts, nor are providers of public goods.
This analysis suggests lawmakers should explore ways to curtail the definition of tax exempt charity, and exclude groups that are now benefiting unfairly from the deduction at taxpayer expense.
You can read the full piece here. I even got to use the phrase “Charity and the Economic Way of Thinking” on page two, for those who know why this is cool.
Posted by Andrew on Tuesday November 22, 2005 | Feedback?
