Tyler Cowen informs us that Singapore has a unique approach to encouraging charitable giving. For each $1 the taxpayer gives to a qualified charity, the government reduces the taxes owed by $2.50. Although Tyler calls this a super charged deduction, it’s actually a credit and it’s similar to a proposal we have been making for quite some time. In our proposal:
- There would be a one-for-one tax credit, limited by each taxpayer’s share of funding for federal welfare programs.
- For each $1 given, the government would be required to reduce its anti-poverty budget by $1.
- Gifts could only go to charitable activities that help the indigent (gifts to churches, symphonies and art museums don’t count).
With full participation, taxpayers rather than politicians would decide where the welfare dollars go. We call this proposal “Taxpayer Choice.” See a brief description here and a longer explanation (study, book) I wrote with Michael Stroup, in which we include 21 questions and answers about the concept’s practicality.