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Abstract

A taxpayer is entitled to a charitable contribution deduction for gifts of money or property made during the taxable year to nonprofit organizations. Part II of this article explores the history of U.S. Internal Revenue Code §170 from its initial enactment in 1917 through the numerous amendments since made. This part does not outline every amendment that Congress has enacted but provides sufficient detail to illustrate how the section has gone from a fairly simple provision to an extremely complex set of rules. Part III addresses various equity considerations. The first issue examined is whether charities have societal value that should be encouraged or subsidized under the Code. Alternatively, this article considers the use of direct expenditures as the primary means of the government's subsidization of charitable organizations and discusses the constitutional roadblocks to direct expenditures. Part III also addresses whether the complex rules that exist today are necessary to achieve the statutory objectives. It also addresses how the charitable contribution deduction fails to further the needs of the poor and whether the provisions should be amended to provide an additional incentive for taxpayers to make contributions to organizations that are designed to combat poverty. Finally, this part addresses how the charitable contribution rules impact the progressive tax structure and how the current scheme is inconsistent with progressive taxation. Part IV considers perspectives on the future of charitable giving. This part analyzes the impact of the elimination of the estate tax and addresses whether Congress should enhance the incentives for charitable giving in light of the phaseout of the estate tax. This might be necessary if the repeal of the estate tax is made permanent. Finally, this part addresses whether Congress must make some statutory adjustments to the charitable contribution rules to protect the integrity of the progressive tax structure.

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