charitable deductions help the rich more than the poor

A great op-ed by former Clinton Labor Secretary, Robert Reich in today's C-J...

This year's charitable donations are expected to total more than $200 billion, a record. But a big portion of this impressive sum -- especially from the wealthy, who have the most to donate -- is going to culture palaces: operas, art museums, symphonies and theaters where the wealthy spend much of their leisure time...

I'm all in favor of supporting the arts and our universities, but let's face it: These aren't really charitable contributions. They're often investments in the lifestyles the wealthy already enjoy and want their children to have, too. They're also investments in prestige -- especially if they result in the family name being engraved on the new wing of an art museum or symphony hall.

It's their business how they donate their money, of course. But not entirely. Charitable donations to just about any not-for-profit organization are deductible from income taxes.

This year, for instance, the U.S. Treasury will be receiving about $40 billion less than it would if the tax code didn't allow for charitable deductions. (That's about the same amount the government now spends on Temporary Assistance for Needy Families, which is what remains of welfare.) Like all tax deductions, this gap has to be filled by other tax revenues or by spending cuts, or else it just adds to the deficit.

I see why a contribution to, say, the Salvation Army should be eligible for a charitable deduction. It helps the poor. But why, exactly, should a contribution to the already extraordinarily wealthy Guggenheim Museum or to Harvard University (which already has an endowment of more than $30 billion)?...

It turns out that only an estimated 10 percent of all charitable deductions are directed at the poor. So here's a modest proposal. At a time when the number of needy continues to rise, when government doesn't have the money to do what's necessary for them and when America's very rich are richer than ever, we should revise the tax code: Focus the charitable deduction on real charities.

If the donation goes to an institution or agency set up to help the poor, the donor gets a full deduction.

If the donation goes somewhere else -- to an art palace, a university, a symphony or any other nonprofit -- the donor gets to deduct only half of the contribution.

Another example where the wealthy get a tax break for a "good" cause. Of course, any time you cut income taxes, or pass income tax deductions or credits, it benefits the wealthy-- since they pay the vast proportion of income taxes.

I don't understand why Reich doesn't go all the way-- and reach the obvious conclusion: "charitable" deductions to the non-poor should not be deductions any longer! Or you could take it a step further and end all "charitable" deductions-- on the way to a flat income tax with no deductions at all.