Charity Begins at Home

It always is a mistake to confuse a progressive tax system with a punitive one. The Senate recognized that fact, when it voted to restore the tax deduction individuals formerly received when they donated works of art or manuscripts to museums and libraries.

If the House now fails to follow suit, it will represent a triumph of public relations over the public interest. Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee and a sincere champion of tax equity, opposes restoration as a give-away to the wealthy. In fact, people of modest income are the real beneficiaries of such deductions.

Progressivity--the notion that tax rates ought to be based on ability to pay--is not a weapon of class warfare, but an instrument of genuine social justice grounded in broad conceptions of the public interest. A tax system that is not only progressive, but also intelligent sometimes offers wealthy individuals incentives to induce them to act in a way advantageous to the public--rather than their private--good.

Charitable deductions are a case in point. Because of them, the United States enjoys a flexible, highly effective network of privately funded social-welfare institutions. Public revenues that otherwise might have been devoted to such services are freed for other worthy purposes. Everyone benefits.

A similar situation used to prevail among our great public art museums and research libraries. Affluent collectors were given tax deductions when they donated works of art or manuscripts to public and nonprofit institutions. It worked. Today, Americans enjoy the benefits of a great network of art museums, 85% of whose holdings were donated by private collectors.

When the tax code was revised in 1986, the deductibility of such gifts was repealed. In the years since then, the total value of all objects donated to museums has declined as much as 63%. For museums and libraries it has been a catastrophe.

Abolition of this deduction did not “soak the rich”; it simply deprived the rest of us of access to our cultural patrimony. The House ought to follow the Senate’s lead and restore it.