INTRODUCTION
Many individuals are philanthropic. They donate portions of their income to a
variety of social, educational, religious, and cultural organizations. Charitable
giving reduces the pressure on governments to participate in similar activities.
The resulting easing of their financial burdens motivates governments to encourage
private charitable giving. They usually accomplish this through the income
tax system.
Governments generally use one of two methods to simulate such giving: tax
deductions or tax credits. In either case, the cost of giving is reduced. Usually in
a tax deduction system, the cost of a donation is reduced by the marginal tax rate
of the donor, whereas in the case of the tax credit system, the cost of donation
usually is reduced by a standard factor for all taxpayers.
INTRODUCTION
Many individuals are philanthropic. They donate portions of their income to a
variety of social, educational, religious, and cultural organizations. Charitable
giving reduces the pressure on governments to participate in similar activities.
The resulting easing of their financial burdens motivates governments to encourage
private charitable giving. They usually accomplish this through the income
tax system.
Governments generally use one of two methods to simulate such giving: tax
deductions or tax credits. In either case, the cost of giving is reduced. Usually in
a tax deduction system, the cost of a donation is reduced by the marginal tax rate
of the donor, whereas in the case of the tax credit system, the cost of donation
usually is reduced by a standard factor for all taxpayers.
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