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President Obama has proposed lowering the rate at which high-income taxpayers can claim deductions from their income tax for charitable donations. From an economics perspective, this paper reviews three challenges to policy makers for treating charitable donations equitably: (1) how much to incentivize charitable giving, (2) whether equity among taxpayers ought to be defined before or after their donations, and (3) if, and how much, the tax rate should grow with income level.

Michael Rushton, Associate Professor, and Director of MPA and Arts Administration Programs.

Charitable Giving and the Personal Income Tax (pdf)

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