Government Spending Crowds Out Charitable Giving

If the 2003 tax cuts are allowed to expire, the income tax on upper-income taxpayers will increase by 10 percent and the capital gains tax will increase by 33 percent. This is sure to have a negative impact on charitable giving, write former White House aide Scott Walter and Sandra Swirski in a recent legal backgrounder from the Washington Legal Foundation. Households whose wealth exceeds $1 million–7 percent of the population–provide half of all charitable contributions. Walter and Swirski observe that during the boom years 1995-2000 real income per capita increased by 12 percent while household giving increased by 54 percent. But charity will suffer as the economy slows and government deficit spending increases.