FairTax Overview
3.0
Giving as a percent of GDP: 1971 to 2011
2.5
2.0
1.5
1.0
0.5
0.0
Source: Data from Giving USA Annual Reports, various years.
When the economy is up, along with personal income, Americans give. When the economy falls off a
cliff, so does charitable giving. Americans are always generous, but the key to sustaining their giving is
a booming economy. Economists have consistently predicted a sustained boom in the American
economy once consumption taxes replace income taxation. 77 This will drive charitable giving to new
heights.
When do the wealthy give? When they want to give!
While serious wealth is only a narrow sector of charitable giving, when compared to the breadth of
modest giving, it does command high visibility in the press. Therefore, it is worthwhile addressing here.
The highest net worth benefactors, who grant large donations, are primarily and overwhelmingly
influenced by their desire to contribute to a cause.78 Once they make that decision to contribute, they
then tailor that contribution to maximize the contribution while minimizing taxes.79 The reciprocal is
very rarely the case. Just as the FairTax allows every American to make their business decisions solely
on what is good for their customers and employers, rather than being hamstrung by tax consequences,
the FairTax unfetters the wealthy from any tax considerations on their charitable giving.
What is the effect on religious donations?
77
See Kotlikoff, Laurence J.and Sabine Jokisch, “Simulating the Dynamic Macroeconomic and Microeconomic Effects of
the FairTax,” National Tax Journal, June 2007. David G. Tuerck, et.al., “The Economic Effects of the FairTax: Results from
the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007. Arduin, Laffer &
Moore Econometrics, A Macroeconomic Analysis of the FairTax Proposal, June, 2006.
78
The 2000 National Committee on Planned Giving’s updated donor survey results show “unequivocally that the top reason
people create a charitable bequest, establish a charitable remainder trust or other planned gift is the desire to support the
charitable organization and its mission. Charitable intent as a key motivating factor was much more of a priority than
financial or tax considerations.” Quoted from Burrill, Janice H., “The Effects of Estate Tax Repeal on Philanthropy,” Trust
& Estates, Oct. 2001, Vol. 140, No. 10.
79
A 1996 Independent Sector poll of people who made charitable donations found that “keeping taxes down” ranked dead
last on a list of seven reasons people gave for giving, and was cited as the second least likely factor to influence giving (even
behind “being encouraged by an employer”). See Riley, Tom, “The Final Cut,” Philanthropy Magazine, March, 1999.
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