The CBO says that adding a contribution floor would reduce the total federal tax subsidy, as well as donations to charity. The reduction in the subsidy would lead to an increase of government revenue larger than the reduction of giving, whether measured in dollars or a percentage change. Introducing a floor would continue to provide a tax incentive for giving above its level. At the same time, it might reduce the tax subsidy for donations that people might have made; even without a tax incentive.
Here are some additional findings by the CBO report:
- Allowing all taxpayers to claim a deduction for charitable giving would have increased donations in 2006 by $2 billion (or 1%).
- This also would have increased the total tax subsidy by $5.2 billion (or 13%).
- Combining a deduction for all taxpayers with a contribution floor could increase donations and decrease the tax subsidy.