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Haiti earthquake rattles the tax law

January 20, 2010

When something bad happens, politicians reflexively reach for the tax code. They should put it down and back away slowly, as Howard Gleckman explains at TaxVox:

In a rare bit of bipartisanship, Democrats and Republicans on the House Ways & Means Committee have introduced legislation to allow people who contribute to Haiti relief in 2010 to take a tax deduction against last year’s taxes. Well-intentioned as it may be, the measure is wrong-headed and likely to create more problems than it solves.

...

Why does Congress want to encourage people to give to Haiti as opposed to other equally important causes? I’m not downplaying the Haitian catastrophe in any way. But do Haitians need more help than, say, 2 million displaced Somalis? Is a homeless family in Port au Prince more homeless than a family in Congo, where a civil war has killed five million and left another 2.5 million in camps? And are we sure that Haiti-related charities (among which the bill does not distinguish) are all worthy of this extra tax incentive--modest as it may be.

By all means help Haiti. It needs your assistance. But don’t be surprised if congressional micromanagement of your good intentions turns out to be much less helpful than the bill’s sponsors would like.

As bad as Haiti is, it's not the first disaster ever, and one more change to the tax law isn't going to solve that sad country's problems. Of course, the proposed changes are more about politicians making a show of concern than actually accomplishing anything.

UPDATE: Text of HR 4462 as passed by the House is here. In response to a comment, it does nothing to the existing rules for property contributions, including the requirement for a qualified appraisal to claim a fair-market value deduction for a property donation over $5,000.

Tags: tax policy.TaxVox.

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