What fraction of giving should count as a credit?
A charitable tax credit increases giving by reducing the tax price of giving. Is it appropriate to reduce that price to zero by offering a 100% tax credit, or is there an argument for a more limited reduction in tax price to, say, 50? The argument for a more limited credit stems from the assumption that, unless taxpayers must make some additional sacrifice they will not take an interest in how their contributions are used by the charities to which they contribute. When Smith must pay for a cup of coffee, he pays more attention to the quality of the coffee he drinks than he would if coffee were free. The same idea applies, so it might be argued, to charitable giving.
