Law Commons^™

Charitable Subsidies And Nonprofit Governance: Comparing The Charitable Deduction With The Exemption For Endowment Income, David M. Schizer

Faculty Scholarship

Charitable subsidies are supposed to encourage positive externalities from charity. In principle, the government can pursue this goal by evaluating specific charitable initiatives and deciding how much each should receive. Although the government sometimes makes this sort of fine-grained judgment, this Article focuses on two income tax rules that leave the government essentially no discretion about which charities to fund: the deduction for donations to charity ("the deduction") and the exemption of a charity's investment income ("the exemption"). With each subsidy, federal dollars flow automatically as long as charities satisfy very general criteria.

As a result, these subsidies are especially …

The Hidden Limits Of The Charitable Deduction: An Introduction To Hypersalience, Lilian Faulhaber

Faculty Scholarship

Behavioral economics introduced the concept of salience to law and economics. In the area of tax policy, salience refers to the prominence of taxes in the minds of taxpayers. This article complicates the literature on salience and taxation by introducing the concept of “hypersalience,” which is in many ways the mirror image of hidden taxation. While a revenue-raising tax provision must be hidden for taxpayers to underestimate their tax bill, a revenue-reducing tax provision – such as a deduction, exclusion, or credit – must be more than fully salient for taxpayers to underestimate their tax bill. In other words, the …

Tax Expenditure Analysis And Constitutional Decisions , Linda Sugin

Faculty Scholarship

This article looks at the significance of the similarities and differences between tax benefits and direct spending for purposes of the equal protection and establishment clauses, with a particular focus on the charitable contribution deduction. Because economic equivalence is not critical under these constitutional provisions, tax expenditure analysis is not relevant to the legal analysis. While this article deals only briefly with numerous provisions of the Code and analyzes only two constitutional provisions, it provides a model for considering the constitutionality of any tax provision.

Theories Of The Corporation And The Tax Treatment Of Corporate Philanthropy Symposium: Corporate Philanthropy Law, Culture, Education, And Politics, Linda Sugin

Faculty Scholarship

This essay is organized as follows: Part I describes the entity model of the corporation as developed in corporate and ethical theory, showing how that model is embodied in the Code and how variations in that model produce different conclusions about the legitimacy of the charitable contribution deduction for corporations. It discusses some issues that arise when corporate philanthropy is considered in the context of the entity theory and how the tax law might respond to those issues. Part II explains how the nexus-of-contracts conception of the corporation, applied as an analytical tool, challenges the tax law's treatment of corporate …