Cover Story

God loves a cheerful giver (but Uncle Sam is not so picky)

The flat tax. The national sales tax. The fairer, simpler tax. One common question, at least in the early stages in the debate over tax reform, is whether the charitable tax deduction should remain. What would be the impact on charitable giving? And if the giving is biblically motivated, should it matter?

Issue: "Tinkering with the tax code," April 6, 1996

South Bend, Ind.--The older woman clearly isn't happy. All she wants is to get rid of the avocado-green sofa that's taking up space in her garage. Joe Brown, the driver of the Salvation Army's collection truck in South Bend, tries to explain to her that he can't take the damaged sofa because it has no resale value; no, he adds, the Salvation Army can't "just fix it up"; they no longer do upholstery work; she'll have to call the city to come haul her sofa away.

The donor's day isn't a total loss, however. She does manage to unload on the local charity an armchair done in a truly ugly velvet brocade. It's unsteady on its feet and wet from being left out in the rain, but Mr. Brown agrees to take it. He also gives in on a metal patio table with a single chair. In a few spots, the original white paint on both items actually shows through the rust.

"Thank you, ma'am," Mr. Brown says, loading the stuff into his truck. "Have a nice day."

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"Where's the [expletive deleted] trash can?" she scowls, scanning the street for her wind-tossed receptacle. Then she shuffles off without saying good-bye.

If "charity suffers long, and is kind," then certainly the Salvation Army's Mr. Brown and his assistant, Antonio Richardson, qualify for heavenly rewards; as for this South Bend donor, she already has hers: a pink receipt from the Salvation Army acknowledging her gift of junk. There's no value written on the slip of paper; federal law says she gets to fill that in herself, using whatever figure her conscience-and the threat of a future audit-will allow.

"I try to take whatever I can," Mr. Brown explains back in the warmth of the truck. "Something like that sofa, it's too big for us to get rid of, and nobody's ever going to buy that thing. The chair, it's pretty bad, too, but at least it's smaller. I took it to make her happy. Some people, when you refuse to take their stuff, they'll say, 'Well that's the last time I'll ever give to the Salvation Army.' It's really a shame people think like that. They don't understand what it's all about. So I took the chair, and maybe she'll call us back again when she has something better. I don't think we can use it, but we've got a big trash compactor back at the Center. It'll crush anything."

The same might be said of the current, crushing federal tax system. But with just a week left in this 1996 tax season, almost everyone in Washington, D.C., and beyond agrees that the nation's massive "tax compactor" must go, or at least be reinvented. Calls abound for a "fairer, simpler" tax system that considers the average American.

Some advocate a "flat tax," in which every adult American would be taxed at the same rate on income above a certain minimum; House majority leader Dick Armey (R-Texas), Jack Kemp, who headed a Senate tax-reform task force, and former Republican presidential candidate Steve Forbes have proposed a 17-percent version. Another idea is a national sales tax, championed by House Ways and Means Committee Chairman Bill Archer (R-Texas). Such a tax would scrap the current tax deductions in favor of applying a tax on the sale of every consumer product; advocates say it would hit everyone equally.

The best-known biblical taxes, of course, were flat. Pharaoh accepted Joseph's advice to take 20 percent of every Egyptian's harvest during the seven fat years, as preparation for the seven thin years to come. God's divine tax, the tithe, is 10 percent.

Some now are arguing for yet another, more radical, option: Scrap the current system for one with a flat tax plus a tax credit or partial tax exemption offered to those who give time and money to help the poor. The goal here is to decentralize the welfare system by requiring the better-off to fund anti-poverty efforts, but allowing individual taxpayers rather than Washington administrators to choose where taxpayer funds should go.

Whatever a revamped U.S. tax system might look like, Americans may soon be debating whether to part with the charitable tax deduction. Begun in 1917, that deduction has given American citizens incentives beyond the purely charitable to give to a variety of organizations.

But seven of 10 taxpayers do not even itemize deductions, and those who do are typically in 15 or 28 percent tax brackets, although the percentage goes up to 39.6 for highest-income citizens. The rich are given much greater financial incentives to give than are the poor.


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