Where tax breaks meet high fashion

The Metropolitan Museum of Art's Costume Institute, a walk-in closet filled with old dresses, isn’t my idea of a good cause.

- Binyamin Appelbaum

But that’s OK. There are plenty of charities that won't be getting checks from me. What does stick in my craw is that the Met gets to reap the benefits of larger federal tax breaks than your local church or soup kitchen.

Americans with bigger incomes get larger income tax deductions on every dollar they donate to charity. If the famous and fabulous people who glided up the Met's blue-carpeted steps at the Costume Institute's annual gala in New York on Monday evening actually paid for their own tickets, which ran $75,000 (2.5 million baht) per person, they could deduct most of the cost. For some of them, that could amount to a discount of about 30% off the price of admission.

The Met benefits, too, because tax breaks encourage people and corporations to make larger donations. This year’s gala raised $31 million — more than the budgets of many New York nonprofits, including the Bowery Mission, which helps New Yorkers experienc-ing homelessness by providing shelter, food, and clean clothing.

The charitable tax deduction is distorting American philanthropy. It doesn’t just shape where dollars go; it also warps the way that nonprofits behave. Let's find out what the Met Gala looks like without the federal govern-ment as a silent sponsor.

Let's change the law so that every donated dollar gets the same federal subsidy, whether it comes from the pocket of a billionaire in a Marc Jacobs tuxedo dress or from your pocket.

The charitable deduction was enacted by Congress to encourage donations to charity by reducing the giver's cost. If a person donates $10,000 in income that otherwise would be taxed at a 24% rate, the deduction means they can give that $10,000 while only forgoing $7,600. The government is basically chipping in the other $2,400, which it would otherwise collect in taxes. And the hope is that the donor treats the government's leniency as a reason to give away a little more money.