Opinion: U.K. Government Right on Charity Tax-Break Cap

The fight over the British government’s plan to limit tax relief for high earners, including deductions for charitable donations, is “textbook case” of emotion overriding sound policy-making, a Financial Times writer asserts.

Charities, universities, philanthropists, and politicians from all three major parties have criticized Chancellor George Osborne’s proposal to cap annual tax-relief claims, saying it would deter major gifts.

“Lost in all the wailing has been the simple insight that tax relief is public spending by another name,” Philip Stephens writes. “The deduction on my big-hearted gift to the Royal Opera House could otherwise be used to pay down the deficit or help build a new school.”

The argument for unlimited tax relief on gifts “assumes that rich philanthropists always make better choices than voters or elected politicians in deciding what counts as a deserving cause,” Stephens adds.

The Treasury is reportedly reconsidering aspects of the plan, and Prime Minister David Cameron’s office has announced it will consult with critics, but Mr. Cameron told the BBC on Monday that the government will not back off efforts to stop wealthy Britons from using philanthropy to slash their tax bills.