Did you know that you can be rewarded for supporting a cause that you are passionate about? Ordinary taxes that take a percentage of people’s monthly income are used by the government on public services like building projects or transportation infrastructure. Charitable donations, however, can provide tax deductions. This system was implemented by the Internal Revenue Service to encourage more giving to good causes from people. People are able to donate to qualified organizations, then deduct the amount they spent from their adjusted gross income, thus lowering the amount of taxes they owe. These deductions, essential to helping a community, should be kept.
To begin, tax deductions incentivize donations. According to the U.S. Chamber of Commerce, 69 percent of the U.S. population made donations within the last year. When people can deduct their amount of taxable income, it makes them more willing to donate to organizations. The tax deduction system also makes donating more accessible for working class people, not just the wealthy. It serves as a miniature act of gratitude from the government for giving back. Boston Latin School AP Economics teacher Ms. Ashley Balbian explains, “Tax deductions for charitable giving are a practical and ethical way to promote the common good.” Tax deductions help direct personal wealth toward causes that benefit communities.
Tax deductions also empower people to choose how they want their money to support the public rather than the government. They can feel satisfied by donating to their local church or a grassroots nonprofit helping with education. Without tax deductions, there is more financial strain on the donor’s income due to their donation and full-price taxes.
When donations go toward good causes that benefit a community, they should be incentivized. This money is able to fill in the gaps left by government-regulated taxes. Donations, for example, can go to organizations that help with food insecurity or poverty relief, issues that tax dollars typically do not address much. These charitable organizations can be extremely effective, spending money wisely to help the public in specific areas. St. Jude Children’s Research Hospital, for example, uses charitable donations to fund research and cover the cost of treatment for its patients.
Aside from the financial help to the public that tax deductions provide for charitable donations, they also help foster connections and build community by encouraging generosity. Jessica Tec Ciau (I), a frequent donor and volunteer to charity, shares, “[By donating], you’re also giving people that emotional support they could also use where it’s like there are people who are thinking about you […] [and] want to help.” It is through the joint effort of many people showing they care to donate that fosters a bond through giving. Taxes that one must pay can never build that same sense of connectedness within a community.
Although many are concerned that tax deductions for donations favor the wealthy, as they can donate money to an organization for large tax deductions, there are ways to prevent this. They should not be outright eliminated because charitable donations still help the general public more than they harm them. Ordinary people would still be donating and helping organizations, even if the amount deducted from their taxable income is smaller.
BLS AP Economics teacher Mr. Patrick Boor suggests, “You could get a bigger deduction […] if the organization [you donate to] meets certain public good criteria.” Instead of tax deductions being the same amount regardless of the organization, tax deductions could be need-based, with more being allocated to organizations that need more funding and less to already big institutions. In this way, the tax deductions would encourage the wealthy to donate to smaller organizations rather than to big institutions just for the deduction. Another possible solution to help make the system more fair for everyone is to have naturally higher taxes on wealthy individuals. This way, even after they donate to get the deduction, they will still be paying a fair amount of taxes.
Tax deductions overall encourage generosity regardless of economic class. They are a healthy and good way to incentivize donations to organizations that ultimately benefit many aspects of society that cannot be as easily achieved without the deductions. Even BLS students can engage in donating whatever they can spare to foster community bonds and draw more people to help for the greater good of the public.