Wednesday, June 14, 2006

I really like this idea.
My proposal (which I suspect is not original) is that, on top of the current deduction for charitable contributions, we create a large charitable exemption, of, say $20,000. That would mean that you could donate up to $20,000 and have that amount taken off your taxes. Thus, the after-tax cost of your donation would be zero. For people whose annual tax obligation is less than $20,000, the income tax would essentially be optional. You could pay your taxes, or you could give an equivalent amount to charity.

A charitable exemption would have the effect of shifting resources from government to private charities. I believe that would be a net plus for people in need.

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