The Economist has a long article on efforts to curb the charitable tax deduction:
There was little opposition in America when in 1917, four years after the federal government gained the constitutional right to levy an income tax, American taxpayers were allowed to deduct charitable donations from their taxable income (again, extending precedent established in the 19th century). A year later, Americans were granted, at death, unlimited deductions for their charitable bequests from the new estate tax.
Some economists say this can be justified on the basis that taxable income should include only personal consumption and wealth creation, and money given to charity is arguably neither. This was the implicit logic behind the development of deductible donations in Britain in the 1920s, when donors began to covenant part of their income to charities, and thereby avoid paying tax on it.
Robert Reich of Stanford University offers a robust counter to this view. "If a person has legitimate ownership of resources and can rightfully decide how to dispose of those resources, then whatever a person decides to do with those resources—spend it on luxury goods or give it to charity—is, by definition, tautologically, consumption." It is demonstrably true that people derive pleasure from their donations. They may also earn benefits that are hard to come by through other means and peculiarly prized—social esteem and status, for example. Far from being non-consumption, giving is a particularly high-quality form of personal consumption.
The Economist doesn't mention it, but back in 2002 when Professor Reich, who had been Bill Clinton's secretary of labor, was running for governor of Massachusetts, he disclosed a tax return showing income of more than $1 million and charitable contributions of $2,714, including the value of a used drum set.