President Bush’s proposal for a new tax break to spur charitable giving could generate $5.5 billion in new donations but cost the government $6.2 billion in lost taxes, a new study says.
C. Eugene Steuerle, an Urban Institute economist who prepared the study, suggested to the Senate Finance Committee that lawmakers require a minimum level of donations before the tax break takes effect, the Associated Press reported March 14.
If the incentive worked, he said, growth in giving would exceed the loss in revenue. But if the incentive flopped, he said, government could lose more than twice the increase in giving.
That’s because many taxpayers would be getting a new tax break for donations they’re already making.
So he suggested that the tax break not kick in until a taxpayer reached a minimum level of giving, such as $250 a year.
The White House estimates Bush’s proposed charitable-giving incentive will cost $6 billion in 2006, the first year it takes full effect, or $52 billion over the next 10 years.
Roughly 70 percent of taxpayers now get no tax break when the make a charitable contribution.
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