Charitable Deduction

Politico: Open Letter from Economists on the Charitable Deduction

APRIL 25—The following letter was included on page 20 in today’s print version of Politico.

An Open Letter from Economists on the Charitable Deduction

As Congress and the Administration deliberate fundamental tax reform, a variety of voices will fairly claim their tax situation is unique, deserving of special treatment. However, only the charitable deduction can make this case without reservation or equivocation. It truly is unique in purpose and consequence, and should be retained in any income tax reform.

For every other tax incentive, the tax benefit follows some action or aspect relating directly to and benefitting the taxpayer. A donor making a charitable deduction, in contrast, benefits neither the taxpayer nor the receiving institution, but rather the population that institution serves, whether unwed mothers, the environment, education, or religious engagement.

The social safety net comprises strands from government at all levels interwoven with services provided by national philanthropic organizations like the Red Cross, and local organizations addressing local needs. As a society we reap tremendous benefits in cost and effectiveness by relying extensively on these private institutions. Parsimonious with their resources, their efforts are often leveraged many times over by dedicated, unpaid volunteers inspired to support their communities in ways and to a degree federal programs cannot hope to match. One needn’t disparage federal social safety net programs to acknowledge the tremendous advantages to society, and the important budgetary savings, from relying on volunteer-driven, private, philanthropic organizations across the country. These organizations and volunteers would not achieve the same kind of success without the charitable deduction and the generous support of philanthropic Americans.

A charitable donation is a selfless act. It is also an economic act, transferring resources from the donor to those in need. And according to the Joint Committee on Taxation last year individuals gave away almost $218 billion. As the resources no longer remain with the donor, it would be illogical to tax the donor on those resources as though they remained the donor’s property. As Congress advances fundamental tax reform, as professional economists we urge all negotiating parties to preserve the charitable deduction as a proper, beneficial, and socially cost-effective feature of the federal individual income tax and contributor to a civil society.

Respectfully,

  • Rudy Penner, Former Director, CBO
  • Edward C. Prescott, Nobel Laureate in Economics, Arizona State University
  • Tyler Cowen, George Mason University
  • N. Gregory Mankiw, former Council of Economic Advisers chair (President George W. Bush), Harvard University
  • J.D. Foster, Heritage Foundation
  • John Greenhut, Texas A&M University, Commerce
  • Sanjai Bhagat, University of Colorado
  • Roger B. Porter, Harvard University
  • Don M. Chance, Louisiana State University
  • Richard E. Just, University of Maryland
  • James VanderHoff, Rutgers-Newark
  • Dennis Halcoussis, California State University, Northridge
  • Roger B. Betancourt, University of Maryland
  • Gregory Burge, University of Oklahoma
  • Amy Glass, Texas A&M University
  • R. L. Promboin, University of Maryland
  • Tom Nisbett, The Nisbett Group
  • Steven G. Craig, University of Houston
  • Robert Feenstra, University of California, Davis
  • David L. Goldenberg, Farleigh Dickinson University
  • Mark Isaac, Florida State University
  • Edward D. Emery, St. Olaf College
  • Gregory D. Hess, Claremont McKenna College
  • Daniel Hamermesh, University of Texas, Austin
  • Richard E. Ericson, East Carolina University
  • Lance Howe, University of Alaska
  • Martin F. Grace, Georgia State University
  • Patricia Hughes, St. Cloud State University
  • Scott Harrington, University of Pennsylvania
  • Peter Lewin, University of Texas, Dallas
  • Kathy Krynski, Kenyon College
  • Warren L. Jones, Western Illinois University
  • Scott Drewianka, University of Wisconsin, Milwaukee
  • George Langelett, South Dakota State University
  • Ronald W. Jones, University of Rochester
  • Muhammad Q. Islam, Saint Louis University
  • Kristina M. Lybecker, Colorado College
  • Stephen M. Miller, University of Nevada, Las Vegas
  • Richard Rawlins, Missouri Southern State University
  • Eric Rasmusen, Indiana University
  • Wilbur Monreo, U.S. Treasury Department, retired
  • Thomas Mayer, University of California, Davis
  • Kevin McCabe, George Mason University
  • Clifford S. Russell, Vanderbilt University
  • Robert I. Lerman, American University
  • Richard Schmalensee, MIT
  • Patricia Dillon, Scripps College
  • Richard Sheehan, University of Notre Dame
  • Douglas M. Patterson, Virginia Tech
  • Stephen R. Lewis, Jr., Carleton College
  • Bernard Baumohl, The Economic Outlook Group, LLC
  • Jody Lipford, Presbyterian College
  • Leslie E. Papke, Michigan State University
  • William McEachern, University of Connecticut
  • Markos J. Mamalakis, University of Wisconsin, Milwaukee
  • Todd P. Steen, Hope College
  • Robert Wisner, Iowa State University
  • Richard Timberlake, University of Georgia
  • Bruce Wydick, University of San Francisco
  • John P. Tiemstra, Calvin College
  • June O’Neill, City University of New York
  • Kenneth Elzinga, University of Virginia
  • Earl L. Grinols, Baylor University
  • Michael Smitka, Washington and Lee University
  • Thomas B. Petska, IRS, retired
  • Richard W. Stratton, University of Akron
  • J. Gregg Whittaker, William Jewel College
  • Michael Woodford, Columbia University
  • Marina v.N. Whitman, University of Michigan
  • Larry Harris, University of Southern California
  • Bruce Webb, Gordon College
  • David L. Cleeton, Illinois State University
  • Stacie E. Beck, University of Delaware
  • Robert A. Baade, Lake Forest College
  • Donald E. Campbell, College of William and Mary
  • Steven Cobb, Xavier University
  • James Barth, Auburn University
  • James D. Adams, Rensselaer Polytechnic Institute
  • Susan Christoffersen, Philadelphia University
  • Richard J. Cebula, Jacksonville University
  • Andrew R. Blair, University of Pittsburgh
  • Christopher C. Barnekov, FCC, retired
  • Michael Adler, Columbia University
  • Anup Agrawal, University of Alabama
  • Peter Brust, University of Tampa
  • David L. Chicoine, South Dakota University
  • Michael Brennan, UCLA
  • Gregory Givens, University of Alabama
  • Lawrence R. Cima, John Carroll University
  • Paul Pieper, University of Illinois, Chicago
  • Suzanne Heller Clain, Villanova University
  • Kent Olson, Oklahoma State University
  • G. Geoffrey Booth, Michigan State University
  • Timothy F. Slaper, Indiana Business Research Center
  • Patricia Brynes, University of Illinois, Springfield
  • John A. Sorrentino, Temple University
  • Douglas E. Morris, University of New Hampshire
  • Walton Padelford, Union University
  • Stephen W. Salant, University of Michigan
  • Judith W. Mills, Southern Connecticut State University
  • Oded Palmon, Rutgers University
  • Bonnie Wilson, Saint Louis University
  • Alan Rufus Waters, California State University, Fresno
  • Pai-Ling Yin, MIT
  • David Ranson, H.C. Wainwright and Co. Economics Inc.
  • J. Dewey Daane, Vanderbilt University
  • George M. Perkins, Bates College
  • Noralyn Marshall, Risk Management Advisors
  • A. Seddik Meziani, Montclair State University
  • Robert A. Strong, University of Maine
  • Robert Seeley, Wilkes University
  • Marc J. Melitz, Harvard University
  • Wallace Oates, University of Maryland
  • Lee E. Ohanian, Hoover Institution
  • Erik Thorbecke, Cornell University
  • Mario J. Miranda, Ohio State University
  • Neil T. Skaggs, Illinois State University
  • Steve Gardner, Baylor University
  • Joseph A. McKinney, Baylor University
  • David E. Mills, University of Virginia
  • John Ruggiero, University of Dayton
  • Adel S. Z. Abadeer, Calvin College
  • Kenneth Carrow, Indiana University
  • George G. Pennacchi, University of Illinois, Urbana-Champaign
  • Mario J. Crucini, Vanderbilt University
  • Arnold R. Cowan, Iowa State University
  • Frank Egan, Trinity College
  • C.  Barry Pfitzner, Randolph Macon College
  • Michael P. Niemira, International Council of Shopping Centers
  • Peter Arcidiacono, Duke University
  • J. Jay Choi, Temple University
  • Robert Whaples, Wake Forest University
  • Joe Kennedy, Kennedy Research LLC
  • John Volpe, Catholic University
  • Claudia Goldin, Harvard University
  • Art Goldsmith, Washington and Lee University
  • Ananda R. Ganguly, Claremont McKenna College
  • James S. Hanson, Wilamette University
  • John M. Heineke, Santa Clara University
  • Neil E. Harl, Iowa State University
  • Paul M. Jakus, Utah State University
  • K. C. Fung, University of California, Santa Cruz
  • King Hurlock, Calvert Investment Counsel
  • Dianne Wilner Green, Green Acres Technology
  • Peter Karl Kresl, Bucknell University
  • Kishore G. Kulkarni, Indian Journal of Economics and Business
  • W. J. Lane, University of New Orleans
  • Thomas S. Nesslein, University of Wisconsin, Green Bay
  • Lee Meyer, University of Kentucky
  • Kang Park, Southeast Missouri State University
  • Jonathan E. Leightner, Georgia Regents University
  • Martha Pass, Carleton College
  • C. M. Rendleman, Southern Illinois University
  • Keith Malone, University of North Alabama
  • Robert S. Rycroft, University of Mary Washington
  • Tony Prato, University of Missouri
  • Hamid Mohtadi, University of Wisconsin, Milwaukee
  • John F. Olson, College of St. Benedict
  • Daniel Heath, Georgetown University
  • P.J. Hill, Wheaton College
  • David M. Nelson, Western Washington University
  • Andrew Samwick, Dartmouth College
  • Mark Ottoni-Wilhelm, Indiana University
  • Spiro E. Stefanou, Pennsylvania State University
  • Raymond Sauer, Clemson University
  • Jingyo Suh, Tuskegee University
  • Martin Shubik, Yale University
  • Randal Verbugge, Georgetown University
  • Edward Tower, Duke University
  • Richard Curtin, University of Michigan
  • Virginia Wilcox-Gok, Northern Illinois University
  • David Zilberman, University of California
  • Tom Willett, Claremont Graduate University
  • Philip Trostel, University of Maine
  • Subarna K. Samanta, College of New Jersey
  • Evangelos Otto Simos, University of New Hampshire
  • William Schulze, Cornell University
  • Douglas T. Breeden, Duke University
  • Baizhu Chen, University of Southern California
  • Nancy Bertaux, Xavier University
  • Kalyan Chatterjee, Pennsylvania State University
  • John P. Bonin, Wesleyan University
  • Arthur Blakemore, Arizona State University
  • Samuel K. Andoh, Southern Connecticut State University
  • Byron Brown, Michigan State University
  • Carl Campbell, Northern Illinois University
  • Douglas O. Cook, University of Alabama
  • Case Sprenkle, University of Illinois, Urbana-Champaign
  • William Beranek, University of Georgia
  • John H. Boyd III, Florida International University
  • Tareque Nasser, Kansas State University
  • Robert Alexander, Sweet Briar College
  • Philip Brock, University of Washington
  • Christine Chmura, Chmura Economics and Analytics
  • Nelson C. Mark, University of Notre Dame
  • Cyrus Bina, University of Minnesota
  • Leo J. Navin, Bowling Green State University
  • Matthew Mitchell, University of Toronto
  • Steve Morse, University of Tennessee
  • Stephen D. Cohen, American University
  • Rajnish Mehra, Arizona State University
  • Scott Linn, University of Oklahoma
  • Shyam Sunder, Yale University
  • Robert C. Wolf, University of Wisconsin, La Crosse
  • Donald J. Oswald, California State University, Bakersfield, retired
  • Dennis Muraoka, California State University, Channel Islands
  • Bonnie Wilson, Saint Louis University
  • Stephen D. Younger, Ithaca College
  • Chee Ng, Fairleigh Dickinson University
  • Richard T. Selden, University of Virginia
  • Teresa Tharp, Valencia College
  • Martin C. Spechler, Indiana University
  • Richard MacMinn, Illinois State University
  • Philip Rothman, East Carolina University
  • Robert E. Moore, Georgia State University
  • H. L. Nagel, St. Johns University
  • John A. Powers, University of Cincinnati
  • Elliott Parker, University of Nevada, Reno
  • Mark Weinstein, University of Southern California
  • Charles K. Rowley, George Mason University
  • Michael Sykuta, University of Missouri, Columbia
  • Larry C. Peppers, Washington and Lee University
  • Andrew Light, Liberty University
  • Mukti Upadhyay, Eastern Illinois University
  • Lawrence Southwick, University of Buffalo