'Time to Write-Off The Charitable-Giving Deduction?' NO WAY! It's The Only Thing That Ensures The 0.1-Percent Does SOMETHING for the Public Good!

Ronald Lauder, photographed for the New York Times, November 27, 2001

NEW YORK — In this time of increasingly onerous budget cuts, the idea, proposed by Jack Shakely in the Los Angeles Times, eliminate the federal income tax deduction for charities (including schools, colleges, hospitals, medical research, and the arts) borders on the sinister. While most taxpayers “give” regardless of deductibility, many larger donors would be tempted to either reduce their giving, or eliminate it entirely, without the added benefit of tax deductibility.

         Indeed, some of our greatest philanthropists leverage “giving” as a way to significantly reduce their tax burden. For billionaires-by-birth such as Ronald Lauder, this form of "tax avoidance" may be one of the few ways direct large sums of inherited wealth to "the public good," as little of their wealth is eversubject to taxation. Indeed, many of the largest gifts to education, the arts, and scientific research are often the result of sophisticated tax planning.

          Are we, as a nation, willing to sacrifice more than $1 trillion in annual giving—$10 trillion over the next decade—to save just $250 billion in federal tax revenue? Even if just 10% of such giving is dependent upon the current form of deduction, the amount we risk is four times what we would save.
          If you really want to eliminate the deficit, raise taxes on the 1 percent—especially their capital gains.