February 1, 2011
Double the Charitable Deduction to Create Jobs, Reduce PovertyHuffington Post, A New Big Idea: Create Jobs and Reduce Poverty by Doubling the Charitable Deduction, by Dan Froomkin:
Even as the United States suffers from a staggering unemployment crisis and vast income inequality, the nation's wealthiest families are sitting on huge piles of unproductive cash.
So with nothing remotely like a second stimulus bill in the cards, the best hope for goosing the economy, creating jobs and providing relief for the needy could lie in a Washington economist's ingenious scheme to get a chunk of that money put into circulation right now, in helpful ways.
Isabel Sawhill, a budget expert at the Brookings Institution, is pushing to temporarily double the tax deduction for charitable giving, a move that would serve as a powerful incentive for the rich to significantly increase -- or at least accelerate -- their contributions to nonprofit organizations.
(Hat Tip: Francine Lipman.)
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Besides the obvious self-serving argment how would doing this create private sector wealth producing jobs?
Posted by: cubanbob | Feb 1, 2011 5:10:58 PM
This is a very good idea, so good in fact that it has little or no chance of being enacted.
Many commentators argue for a neutral tax system, one that leaves behavior unchanged from what it would be in the absence of the tax system. This is an unrealistic ideal, every tax will affect behavior. So given that taxes affect economic activity, why not structure taxes so that they promote economic behavior that society will welcome.
Doubling the deduction for a charitable deduction (and eliminating limitations on the deduction) should stimulate giving to NGO's which in many cases perform the services that otherwise would be performed by governments, except they probably do it better and more efficiently. Since the program would produce tax cuts for the wealthy, it would surely have the support of Conservatives, so it is the rare policy that maybe everyone benefits from.
Posted by: Sid (real one) | Feb 1, 2011 6:54:51 PM
Instead of changing the charitable deduction, reducing the AFR to allow non-usury loans from retirement accounts secured by life insurance on the donor/lender would free in excess of $150b for immediate non-profit use while encouraging sustainability and monetary velocity without increasing individual tax or depleting the tax base.
Posted by: Doug Delaney | Feb 2, 2011 6:43:11 AM