Indirect Government Aid To the Arts: the Tax Expenditure in Charitable Contributions

Abstract

Government support of the arts consists of a familiar direct portion (including the appropriations to such agencies as the National Endowment for the Arts) and a less-well known indirect portion, including what Surrey has called tax expenditures. The tax expenditure that flows through individual deductions of charitable contributions to arts institutions from taxable income is estimated from IRS data and other sources, and is found to have been between $300 million and $380 million in 1975. This figure is over four times as large as appropriations for the National Endowment for the Arts (the principal direct federal aid program) for fiscal 1975. Viewed as a subsidy to the donor, it is found to be highly regressive.

Get full access to this article

View all access options for this article.

References

American Association of Fund Raising Counsel ( 1963, 1970-1978) Giving USA. New York: American Association of Fund Raising Counsel .

Baumol, W.J. and W.G. Bowen (1966) Performing Arts: The Economic Dilemma. Cambridge: MIT Press.

Boskin, M.J. and M.S. Feldstein (1977) "The effects of the charitable deduction on contributions by low income and middle income households," pp. 1441-1442 in Research Papers, Commission on Private Philanthropy and Public Needs, Vol. 3. Washington, DC: U.S. Treasury Department.

——— (1975a) "The income tax and charitable contributions: Part I—Aggregate and distributional effects." National Tax J. 28, 1: 81-100.

——— (1975b) The Theory of Tax Expenditures. Harvard. Institute of Economic Research Discussion Paper No. 435. Cambridge : Harvard University.

Feldstein, M. (1974) Taxes and Charitable Contributions: Differences in the Impact of Alternative Tax Policies on Religious, Educational and Other Organizations. Harvard Institute of Economic Research Discussion Paper No. 387. Cambridge: Harvard University .

——— and C. Clotfelter (1977) "Tax incentives and charitable contributions in the United States: a micro-economic analysis," pp. 1393-1418 in Research Papers, Commission on Private Philanthropy and Public Needs, Vol. 3. Washington, DC: U.S. Treasury Department.

Ford Foundation (1974) The Finances of the Performing Arts. New York: Ford Foundation.

McNees, S.K. (1973) "Deductibility of Charitable Bequests." National Tax J. 27, 1: 79-98.

10.

Morgan, J.N. , R.F. Dye , and J. Hybels (1977) "Results from the national survey of philanthropy ," in Research Papers, Commission on Private Philanthropy and Public Needs, Vol. 1. Washington, DC: U.S. Treasury Department.

11.

Netzer, D. (1978) The Subsidized Muse. New York : Cambridge Univ. Press.

12.

Schuster, J.M. (1975) Program Evaluation and Cultural Policy. MIT Laboratory for Architecture and Planning Working Paper. Cambridge : MIT.

13.

Stiglitz, J.E. and M.J. Boskin (1976) Some Lessons from the New Public Finance. National Bureau of Economic Research Working Paper No. 151. Palo Alto, CA: Center for Economic Analysis of Human Behavior and Social Institutions of the NBER.

14.

Surrey, S.S. (1973) Pathways to Tax Reform. Cambridge : Harvard Univ. Press.

15.

U.S. Treasury Department, Internal Revenue Service (1972, 1973) Federal Income Tax Forms.

16.

——— (1962, 1972, 1973) "Statistics of income." Individual Income Tax Returns.