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Consumer Confidential: You can deduct charitable donations. Why no tax benefit for volunteering?

David Lazarus, Los Angeles Times on

Published in Business News

The deduction for business-related driving, meanwhile, is 57.5 cents a mile.

You also can deduct the cost of purchasing and cleaning a uniform related to volunteer work -- but only if the clothes are unsuitable for everyday use. Surgical scrubs, yes; an ordinary T-shirt, not so much.

Considering these are part of regulations originating more than a century ago, it's time Congress revisited the matter.

My proposal is to acknowledge that people's time and service do have value, and that volunteering for charitable work is no less laudable than donating money or property.

How do you value volunteerism? Yes, that's tricky because not everyone's offering is equal.

A consumer columnist helping bag and hand out groceries at a food pantry is perhaps not the same as an attorney who bills $1,000 an hour providing a nonprofit with free legal services.

The solution, I think, is to adopt a conservative approach and simply allow all volunteers to deduct the minimum wage in their city or state, whichever amount is higher.

The minimum wage in Los Angeles is currently $14.25 an hour for companies with 26 or more employees. The California minimum wage is $12 an hour, rising to $15 by 2023.

So let's have licensed nonprofits track hours volunteered and provide volunteers with an annual tally that can be submitted for tax purposes by people who itemize their returns.

You'd receive a tax credit based on the hours contributed to charity, valuing each hour at the prevailing minimum wage, regardless of the type of work or service performed.

"It's important to recognize the value of time," said Kathleen McCarthy, director of the Center on Philanthropy and Civil Society at City University of New York. "This is a good idea."

Nobody would get rich off a system like this -- nor should they. But it would create modest recognition of good works, and it would create a financial incentive for volunteer activities.

 

Which is to say, it would acknowledge that time is indeed money.

Tax deductions for charitable donations were established to ensure that people, particularly rich people, kept contributing to worthy causes despite higher tax rates.

A tax credit for volunteering time and labor would be no less positive for society.

And how's this for a twofer: Donate some cash and then volunteer a few hours.

Why wouldn't we want to encourage, and reward, such behavior?

About The Writer

David Lazarus, a Los Angeles Times columnist, writes on consumer issues. He can be reached at david.lazarus@latimes.com.

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