The FairTax and Charitable Donations

What charity would you donate to if you had an extra $5 per month?

With the vast number of amazing charities out there, it is so difficult to pick just one. One reason we donate to the particular charity that we do is primarily based on which cause touches us, a family member, or a friend the most. But what would you say if I told you I had a charity that is better than your charity? I know, you’d probably laugh and walk away, but please hear me out. It really isn’t that any one charity is better than the other, because as I said, it all depends on which one touches us the most.

If you think about it, most charities thrive because there are so many smaller charity groups that supplement the main charity. If it weren’t for Susan G Komen and the vast number of other awareness groups, breast cancer awareness wouldn’t be as big as it is today. If it weren’t for Bret Michaels, Action for Healthy Kids and various others, diabetes would be more prominent in our Nation’s youth than it is today. And if it weren’t for Lance Armstrong, testicular cancer would be killing our Nation’s future generations much more than it currently is.

So, where does the FairTax fall into this? Well, according to

“The FairTax would not decrease total individual charitable contributions. To the contrary, due to the price and income effects, among its other benefits, the FairTax would induce an increase in charitable contributions, subsequently strengthening the vitality of the charitable organizations that are so instrumental in their role in U.S. society.”

Here are a few good points about how the FairTax treats Charities:

  • Qualified not-for-profit organizations receive advantageous tax treatment under the FairTax and are not prohibited from certain types of political activities, as they are under the current system.
  • A large source of income for universities, colleges, and other training institutions is tuition payments. Under current law, tuition payments are not deductible, not creditable, and must be paid with after-tax dollars. Under the FairTax, all payments for tuition and training are considered investments in human capital and not taxable.
  • Voluntary services provided to non-profits today, under the income tax system, are discouraged because out-of-pocket expenditures are not fully deductible. Under the FairTax, such expenditures are paid from pre-tax earnings.
  • Those uncompensated services provided by a charity to that population for which the charity was founded and by which it fulfills its mission do not generate a taxable, retail delivery event under the FairTax. This stands in contrast to barter between commercial interests and individuals or between individuals. Such barter does generate a taxable event.
  • Charitable operations, of course, continue to be tax exempt, operating under a sales tax exemption certificate as they do today with most states. No purchase made by an exempt charity is taxed.
  • When charities provide products or services to individuals for compensation, essentially a retail transaction, that transaction is taxed. This is comparable to the current system not allowing the deduction of that portion of a gift for which the donor received some return compensation.

In summary: The Second Golden Age of Charitable Giving starts with the FairTax.
The first golden age of charitable giving paced the Industrial Revolution boom in the American economy in the early part of the last century. This age was ended by the passage of the income tax. Ending that income tax initiates the Second Golden Age. When this happens, charities’ ability to meet their clients’ needs increases dramatically, reducing demand for government to fill the gap. Which in turn means that tax dollars can be spent more beneficially elsewhere, or taxes may be reduced.

If we want to improve our charities, we must sometimes help other charities. Please help by donating to your state’s FairTax. For more information, please visit Five for FairTax and donate as little as $5. I just did!

Thank you!

Staunch FairTax Supporter

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Posted in Charity, FairTax, FiveForFairTax
One comment on “The FairTax and Charitable Donations
  1. Bill E. Payne says:

    I like Ameri-Cares ( and Team Rubicon ( and others when I know where my donations go. And AFFT, of course!

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