{"id":646,"date":"2013-04-11T06:58:14","date_gmt":"2013-04-11T13:58:14","guid":{"rendered":"http:\/\/www.artsjournal.com\/worth\/?p=646"},"modified":"2013-04-11T07:02:13","modified_gmt":"2013-04-11T14:02:13","slug":"limiting-the-charitable-deduction","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/worth\/2013\/04\/limiting-the-charitable-deduction\/","title":{"rendered":"Limiting the charitable deduction"},"content":{"rendered":"<p><a href=\"https:\/\/www.artsjournal.com\/worth\/wp-content\/uploads\/2013\/04\/1040of1913.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-medium wp-image-648\" alt=\"marginal rates\" src=\"https:\/\/www.artsjournal.com\/worth\/wp-content\/uploads\/2013\/04\/1040of1913-219x300.gif\" width=\"219\" height=\"300\" \/><\/a>As my blog-neighbor Lee Rosenbaum <a href=\"http:\/\/www.artsjournal.com\/culturegrrl\/2013\/04\/obamas-2014-budget-28-limit-on-charitable-deductions-increases-for-smithsonian-arts-agencies.html\">reports<\/a>, the proposed 2014 budget from the White House would cap the tax benefit for charitable donations at 28%. In the U.S., where donations are deducted from the income tax base, the actual rate at which your donation is subsidized is your <em>marginal tax rate<\/em>, i.e. the rate that applies to your last dollar of income earned. Marginal tax rates rise with income, with a top rate of 39.6%, and so a wealthy donor who gives $100 to the local museum gets an income tax reduction of $39.60. The budget proposal would limit this reduction to $28. For taxpayers with a marginal tax rate of 28% or less, the proposal has no impact.<\/p>\n<p>Would this lower the amount people give to nonprofits? Yes: all econometric evidence points to the fact that the rate at which donations are subsidized matters for the amount people give. We may have anecdotes about people who claim the tax break doesn&#8217;t matter, but in aggregate it does.<\/p>\n<p>Does that mean the budget proposal is wrong? Not necessarily. There is nothing particularly special about the status quo of the tax deduction. And there are legitimate questions about whether higher income donors ought to receive a larger tax break than lower income donors, as the current system holds. There are alternatives: Canada, for example, gives a tax credit on donations, the same rate applying to all donors.<\/p>\n<p>I wrote a <a href=\"http:\/\/www.indiana.edu\/~artsadm\/news\/news%20archive\/2010\/MR%20SPEA%20Insight.shtml\">short paper<\/a> in 2010 &#8211; with commentary from my colleagues Kirsten Gronbjerg and Les Lenkowsky &#8211; when this proposal was first floated, and I&#8217;ll post it here because none of the key issues have changed since then.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As my blog-neighbor Lee Rosenbaum reports, the proposed 2014 budget from the White House would cap the tax benefit for charitable donations at 28%. In the U.S., where donations are deducted from the income tax base, the actual rate at which your donation is subsidized is your marginal tax rate, i.e. the rate that applies [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":{"0":"post-646","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-uncategorized","7":"entry","8":"has-post-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p3dIW5-aq","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":3667,"url":"https:\/\/www.artsjournal.com\/worth\/2024\/12\/on-indirect-support-for-the-arts\/","url_meta":{"origin":646,"position":0},"title":"On &#8220;indirect&#8221; support for the arts","author":"Michael Rushton","date":"December 10, 2024","format":false,"excerpt":"Thomas Wolf has\u00a0posted a short piece\u00a0on the history of the National Endowment for the Arts, whether it is likely to survive the coming second Trump administration, and the tax deduction for charitable contributions. I\u2019m going to focus on that last bit\u2026 People who itemize their income tax deductions can claim\u2026","rel":"","context":"In &quot;issues&quot;","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2024\/12\/image-3.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2024\/12\/image-3.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2024\/12\/image-3.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2024\/12\/image-3.png?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":4667,"url":"https:\/\/www.artsjournal.com\/worth\/2026\/03\/should-there-be-a-tax-deduction-for-donating-to-the-nonprofit-arts\/","url_meta":{"origin":646,"position":1},"title":"Should there be a tax deduction for donating to the nonprofit arts?","author":"Michael Rushton","date":"March 10, 2026","format":false,"excerpt":"I was at a seminar yesterday given by Professor Philip Hackney of the University of Pittsburgh School of Law, given (via web) at the Marxe School at Baruch College, on \u201cTax Policy Toward Arts Nonprofits: Democracy or Plutocracy?\u201d It\u2019s a good question! I won\u2019t try to summarize what Professor Hackney\u2026","rel":"","context":"In &quot;issues&quot;","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2026\/03\/image-3.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2026\/03\/image-3.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2026\/03\/image-3.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2026\/03\/image-3.png?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":1533,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/09\/how-should-we-subsidize-charitable-giving-to-the-arts\/","url_meta":{"origin":646,"position":2},"title":"How should we subsidize charitable giving to the arts?","author":"Michael Rushton","date":"September 22, 2014","format":false,"excerpt":"In the New York Times, Nicholas Kristof and Sheryl WuDunn write: Moms in poverty often live in stressful homes while juggling a thousand challenges, and they are disproportionately likely to be teenagers, without a partner to help out. A baby in such an environment is more likely to grow up\u2026","rel":"","context":"In &quot;issues&quot;","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"the state really ought to pay for this","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/09\/nurse-with-baby.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/09\/nurse-with-baby.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/09\/nurse-with-baby.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/09\/nurse-with-baby.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/09\/nurse-with-baby.jpg?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/09\/nurse-with-baby.jpg?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":377,"url":"https:\/\/www.artsjournal.com\/worth\/2013\/02\/targets-the-cost-of-bread-and-nonprofit-arts-pricing\/","url_meta":{"origin":646,"position":3},"title":"Targets, The Cost of Bread, and Nonprofit Arts Pricing","author":"Michael Rushton","date":"February 25, 2013","format":false,"excerpt":"My previous post drew lessons for museum pricing from what we observe in the prices set by cable television providers. But how can for-profit pricing be relevant to nonprofit museums, to orchestras and opera? Don\u2019t the nonprofit arts, unlike cable companies, have a mission to be accessible to all patrons,\u2026","rel":"","context":"With 5 comments","block_context":{"text":"With 5 comments","link":"https:\/\/www.artsjournal.com\/worth\/2013\/02\/targets-the-cost-of-bread-and-nonprofit-arts-pricing\/#comments"},"img":{"alt_text":"Focus on the target","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2013\/02\/archersDM1304_468x364-300x233.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":2514,"url":"https:\/\/www.artsjournal.com\/worth\/2019\/11\/the-wealth-tax-and-the-museum\/","url_meta":{"origin":646,"position":4},"title":"The wealth tax and the museum","author":"Michael Rushton","date":"November 21, 2019","format":false,"excerpt":"At Bloomberg, Tyler Cowen has a short post on some unintended consequences of a wealth tax. It's an idea being talked about in the Democratic candidate debates. In the US we do have a few wealth taxes already: local property taxes, and, for the very, very wealthy, estate taxes. But\u2026","rel":"","context":"In &quot;issues&quot;","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2019\/11\/reading-the-will.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2019\/11\/reading-the-will.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2019\/11\/reading-the-will.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2019\/11\/reading-the-will.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2019\/11\/reading-the-will.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":1966,"url":"https:\/\/www.artsjournal.com\/worth\/2016\/02\/local-state-federal-public-funding-for-the-arts-in-the-u-s\/","url_meta":{"origin":646,"position":5},"title":"Local, state, federal: public funding for the arts in the U.S.","author":"Michael Rushton","date":"February 1, 2016","format":false,"excerpt":"At the Atlantic, Andy Horwitz asks 'Who should pay for the arts in America?' He is specifically asking about nonprofit arts, whose funding comes from paying customers, donors and other sponsors, and the public sector. He observes: The current state of the arts in this country is a microcosm of\u2026","rel":"","context":"In &quot;issues&quot;","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"this land is your land","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2016\/01\/america_map.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2016\/01\/america_map.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2016\/01\/america_map.jpg?resize=525%2C300&ssl=1 1.5x"},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/comments?post=646"}],"version-history":[{"count":0,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/646\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/media?parent=646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/categories?post=646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/tags?post=646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}