CHARITY TO THE RICH - SHOULD SOME CHARITABLE DEDUCTIONS BE DISALLOWED?

Abstract

This paper discusses a proposal by a former cabinet member to limit the deductibility of charitable contributions. The proposal suggests that charitable contributions to “rich” organizations be disallowed. The paper reviews recent literature on the effect of changing tax rates on charitable giving, and motivation for giving by upper-income taxpayers. Academic literature shows little affect on giving by the lower- or upper-income taxpayers. However, there is no consensus on the effect of tax rate manipulation on giving by the middle class.