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DID CONGRESS SABOTAGE THE SALVATION ARMY KETTLE CAMPAIGN?

November 16, 2006

Starting next year the tax law will insist that taxpayers have at least a receipt, cancelled check or credit card statement for any charitable gift. This tightens up the current rule that requires donations of $250 or more to have a written receipt from the charity.

Dr. Maule thinks this is unworkable, and that it may hurt charitable giving:

But what should taxpayers do when given the opportunity to put cash into a collection plate or donation basket? That's one of the interesting questions. Will people continue to give, despite not having the deduction, because they give for reasons other than tax savings? I surely hope so. But I doubt it. I think some people either will refrain from giving or will reduce what they give because of the lost tax benefit.

I am unconvinced. I don't think people drop cash in the collection plate based on the deduction; they know that they don't have any evidence to show the IRS when they do that. I think it will mostly affect the Dr. Frank Burns-types who hallucinate regular cash donations.

By January 2008, Dr. Maule and I will be able to tell who is right. The annual Salvation Army Kettle Campaign is a great laboratory experiment on whether tax deductions affect giving. At lest here in Des Moines, I know the Army carefully tracks giving by kettle location. By comparing the 2006 season giving with the 2007 campaign nationwide, we should have a pretty good idea of whether tax is big factor.

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