Founders’ Fortunes and Philanthropy : A History of the US Charitable Contribution Deduction

Since 1917, itemizing tax filers in the United States have been able to subtract gifts to eligible charities from their taxable income. The deduction is especially valuable to successful entrepreneurs who donate corporate stock. Such philanthropy was seen as a close substitute for government spending until after the mid-twentieth century. In the 1950s and 1960s, high tax rates catalyzed the formation of large foundations from industrial fortunes and precipitated a national debate about the legitimacy of such giving. The midcentury debate preceded increased oversight of charities and foundations and a shift in the way US lawmakers debate the contribution deduction, from a savings reduction to an implicit cost