The Community Income Theory of the Charitable Contributions Deduction

The charitable contributions deduction, a longstanding yet controversial feature of the Internal Revenue Code, has been justified under subsidy theories and tax-base theories. Focusing on the latter, this Article presents and explains a new tax-base theory in support of the charitable contributions deduction-the community income theory. This theory posits that some income, designated as "community income, " is properly excluded from the personal income tax base because it is more naturally attributed to the community than to the individual members of the community. Adopting the presumption that the community generally should be treated as a tax exempt entity, this Article argues that both the charity income tax exemption and the charitable contributions deduction may be defended on the basis that they reflect the theoretically correct taxation of community income.