The Charitable Continuum

Eric Kades


There are powerful fairness and efficiency arguments for making
charitable donations to soup kitchens 100% deductible. These
arguments have no purchase for donations to fund opulent church
organs, yet these too are 100% deductible under the current tax
code. This stark dichotomy is only the tip of the iceberg. Looking at
a wider sampling of charitable gifts reveals a charitable continuum.
Based on sliding scales for efficiency, multiple theories of fairness,
pluralism, institutional competence and social welfare dictate that
charitable deductions should in most cases be fractions between zero
and one. Moreover, the Central Limit Theorem strongly suggests that
combining this welter of largely independent criteria with the wide
variety of charitable gifts results in a classic bell-shaped normal
curve of optimal deductions, with a peak at some central value and
quickly decaying to zero at the extremes of 0% and 100%. Given
that those are the only two options under the current tax code, the
current charitable deduction regime inevitably makes large errors
in most cases. Actually calculating a precise optimal percentage for
each type of charitable donation is of course impractical. This Article
suggests, however, that we can do much better than the systematically
erroneous current charitable deduction. Granting a 100% deduction
only for donations to the desperately poor, along with 50%, 25%,
and 0% for gifts yielding progressively fewer efficiency, fairness,
pluralism, and institutional competence benefits, promises to deliver
a socially more desirable charitable deduction.

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