Wednesday, February 02, 2011

A New Big Idea: Create Jobs and Reduce Poverty by Doubling the Charitable Deduction

Interesting, a budget expert at the Brookings Institution has proposed doubling the tax deduction for charitable giving to help the economy. Would this work? Would it be just another way for people with means to circumvent paying taxes without having any appreciable impact on our economy? How could it be implemented without making the tax code exponentially more confusing? Tax breaks sound great, but the devil’s in the details.

    "We need to get them to spend that money instead of socking it away, and we need to get them to spend it on socially beneficial things," Sawhill told The Huffington Post. "This is simply a device to pry that money out of them."

    There are lots of details still to be worked out. For instance, how do you limit the doubled deduction to donations that will in fact create jobs and/or provide services to the needy? Is there any way to only subsidize contributions beyond what people were already intending to give?

    But there's something undeniably exciting about Sawhill's proposal -- and potentially appealing to people across the political spectrum.

    "It strikes me as a terrific idea, an absolutely terrific idea," said Norman Ornstein, a resident scholar at the American Enterprise Institute. "You're going to get a significant increase in charitable contributions. And you're going to end up with the organizations that get those contributions being able to do more work and so they're going to hire more people."

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