Ohio State Law Journal
Income inequality today is at a high not seen since the 1920s, and one way the very richest display their wealth is through charitable giving. Gifts in excess of $100 million are no longer rare, and in return for their mega-gifts, the biggest donors get their names on buildings, an astonishingly valuable benefit that the tax law ignores. The law makes no distinction between a gift of $100 and a gift of $100 million. This article argues that the tax law of charity should focus on the very rich and harness the culture of philanthropy among the elite. The law should encourage and celebrate what this Article calls “competitive philanthropy,” which defines philanthropic success as inspiring others to exceed your generosity. To promote competitive philanthropy, this article proposes a legal regime that includes both more and less generous elements for donors than current law. It introduces a hierarchy of gift restrictions that calibrates the charitable deduction to reflect the burdens that restrictions impose on charities, disfavoring perpetuity and mission-diverting restrictions. It recommends eschewing the standard donor-centered perspective of the tax law to consider the perspective of charities. While scholars have traditionally analyzed the charitable deduction in terms of economic incentives, this article contends that the deduction may be more important in creating expectations and reinforcing social norms. By focusing on the largest gifts, this Article breaks new ground by integrating concerns about increasing inequality with tax benefits for charities. Policy makers can better design the tax law to address inequality while furthering the dual goals of distributing away from the very rich and protecting charities.
Competitive Philanthropy: Charitable Naming Rights, Inequality and Social Norms, 79 Ohio St. L. J. 1
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