Section 170 of the U.S. Internal Revenue Code is known as the “charitable contribution deduction.” This Article explores the section’s rationale as well as its effect on income/wealth distribution. It reaches the conclusion that the deduction can be justified on efficiency (mitigating the free-riding on public goods and asymmetric information problems) and democracy grounds, but is not “charitable,” as its distributive effects are neutral or even regressive.
This paper was written by Prof. Yoram Margalioth; one of the founders of ILP and its first Academic Chair. It was published in the TIL journal, vol. 18(1), 2017