Give cash subsidy, not a writeoff

December 27, 2012 at 2:46AM
Tyler Schmidt and Jane Becker, both seniors at Roseville High School, rang bells for the Salvation Army outside a Maplewood Cub Foods earlier this month.
Tyler Schmidt and Jane Becker, both seniors at Roseville High School, rang bells for the Salvation Army outside a Maplewood Cub Foods earlier this month. (Star Tribune/The Minnesota Star Tribune)

By all means, the United States should preserve the federal incentive for charitable giving, but we should make one small change. We should take the incentive out of the tax code and, instead, send a check to those who make gifts to eligible institutions.

Currently, if you make a gift of $100,000 and you are in the 35 percent tax bracket, your tax deduction is $35,000. In the future, you wouldn't get the deduction; instead, we the people would send you a check for $35,000.

Under the current system, the lower your tax bracket, the lower your deduction. If you make a gift of $100,000 and you are in the 15 percent tax bracket, you get a $15,000 deduction. Under the new system, you would get a check for $15,000.

Where will we get the money to write these checks? The same place we get the money to pay for the deductions: the American taxpayers.

With this small change, the transactions would be transparent. Congress would have to appropriate the money. It would be part of the budget, not an under-the-table transaction with no accountability.

Some might say the current system seems perverse, increasing the incentive for charitable gifts as your tax bracket increases. Well, that appears to be the way we like it. Many have argued to protect the charitable-giving provision in the tax code. As far as I can tell, no minds have been stirred to ask, "What are we doing?"

* * *

Paul H. O'Neill, Sr., was U.S. Treasury secretary from 2001-2002.

about the writer

about the writer

More from Commentaries

See More
card image
Carlos Gonzalez/The Minnesota Star Tribune

It seems like we’re now heading in the right direction under the leadership of White House border czar Tom Homan.

Opinion | What happens after our shock fades?

card image
card image