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Obama's right: The wealthy don’t need a huge tax break to support charity

Nonprofits are worried that lowering the tax deduction given to the very wealthy for donating to charity would hurt them. But there's no conclusive proof of that.

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“Certainly,” as Andrew Finch, senior director of government affairs for the nonprofit advocacy group Americans for the Arts put it, “people give because they want to give.... Altruism exists.”

Nonprofits should take heart.

Economists of all stripes agree that the tax code determines not if people make donations but how and when, and serves to organize the process of charitable giving rather than determine whether or not it takes place.

Currently, Mr. Obama’s proposal, an idea presented as a way of paying for expansion of the healthcare initiative, is just one of many sitting to the side while the wars in Afghanistan and Iraq take center stage. But as Washington considers the 2011 federal budget and faces the reality of another year in our current economic situation, tax increases will be considered once again.

Obama shouldn’t be distracted by the predictions based purely on fear and by those running the numbers based on economic models. Rather, he should press on with his idea of lowering the tax deduction for the wealthy as it’s based on how individuals actually behave. In Europe and Canada, taxes are higher, but there are far more government-run social services and, compared with the United States, quite minimal individual giving. Americans don’t need a government subsidy to be kind to fellow citizens.

Daniel Grant is the author of “The Business of Being an Artist.”

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