Cover Story

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

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

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

The range of motives behind why people give today is as varied as the quality of items Mr. Brown's truck picked up during his swing through South Bend's donor community, where some hearts were altruistic, and some most definitely weren't.

Stop number seven of 19 along this Salvation Army pick-up route appears the most promising so far. It's a classy neighborhood with big, Cape Cod-style houses, fenced yards, and two-car garages. The owner appears at the storm door as Mr. Richardson heads up the sidewalk. She shakes her head with a frown and motions toward the two-car garage where three black garbage bags await. While the bags are being loaded onto the truck, Mr. Brown approaches the front door, holding the receipt out in front of him like a passport.

This time the homeowner gives a slight nod. The door opens a crack, the pink slip of paper passes through, and then the homeowner disappears. A good deed has just been done, but there's something sterile about it-a sense that some people give only to get. When owners hand over items still in good condition to organizations that require the able-bodied to work in order to receive the items, a modern version of the biblical practice of gleaning is achieved-but both givers and receivers today often fall short of the mark.

The philosophical debate today over the relationship of taxing and charitable giving breaks along two lines-both conservative. In the first camp, the current charitable deduction system would be axed at the root-most likely either by a flat tax or national sales tax-on the grounds that government shouldn't be telling people how to spend their money. Let people keep more of the money they earned and chunks of it will be spent altruistically, this theory goes. The second camp argues that the current tax system should be prudently pruned or altered to continue offering people tax-related inducements to rise above their own self-centeredness and help others.

Stop number seven helps make a case for those in the second camp who say removing all charitable giving incentives, especially in these days of massive social restructuring of the nation's welfare system, could be costly. Family Research Council's vice president for policy, William Mattox, represents this camp. "Congress should do nothing that might have the effect of undermining public support for dismantling the welfare state," says Mr. Mattox. "Not only does this argue for the retention of charitable contributions, it actually argues for the expansion of them."

According to Independent Sector, a Washington, D.C.-based coalition of charities, 32 million itemizers gave about $63 billion to charity in 1993. The group estimates that if deductibility were eliminated, "this level of giving would likely have been more than $20 billion lower."

But the other camp, represented by Rebecca Schaefer of Citizens for a Sound Economy, asserts a flat tax would stimulate giving, not stifle it. She recalls that critics of tax reform in the 1980s predicted tax reductions under President Reagan would spell charitable giving disaster; yet when taxes were lowered in 1986, Americans' charitable giving increased along with their incomes. "This is because individuals would have more money in their pockets to donate to their favorite cause," says Ms. Schaefer. "During the 1980s the real rate of annual giving increased by 5.1 percent, compared to an annual giving rate of just 3.3 percent during the 1970s."

It's 11:30 a.m. Time to make one more stop before heading back to the Center for lunch. The house is massive and beautiful, nestled in a bend of the St. Joseph River. Lawsona Gibson, 59, steps out from behind the glass storm door and actually accompanies Mr. Brown into the garage. She pops the trunk of a pearl-white Lincoln Town Car to reveal enough designer clothes to fill a small boutique.

Mr. Brown hands her a receipt. She lays it aside absent-mindedly while she chats with the two Salvation Army workers. Finally, while both men are loading the truck, she's asked whether she plans to keep the receipt for tax purposes. "Probably, unless I lose it," Mrs. Gibson answers, patting her pockets and glancing around the garage as if she has already done just that. "We donate once or twice a year, and sometimes I lose the receipt, so I can't use it."

"Thank you, fellas," she calls after she's relieved of several hundred dollars worth of good clothes. She slams the trunk of the Lincoln and heads back inside. She doesn't stop to pick up her receipt, which is barely visible under a stack of magazines in the garage.


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