Question

what will happen to charities of we switch to flat tax

Answer 1

Congress passed the income tax deduction for charitable contributions in 1917, only four years after ratification of the Sixteenth Amendment, which established the federal income tax. The purpose of the deduction then, as today, was to promote private donations to nonprofit institutions. Through the ups and downs of federal income tax rates, the deduction for charitable contributions has remained constant and unquestioned -- until now.
With talk of overhauling the federal income tax in favor of a simple, consumption-based flat tax also has come talk of eliminating the charitable contribution deduction. This has raised considerable controversy. Many proponents of a flat income tax call for retaining the charitable deduction, but there are substantial reasons to eliminate the charitable deduction as part of any flat tax proposal. Contrary to popular opinion, the data suggest that giving to charities probably would increase with passage of a flat tax with no charitable deduction. The reason: The flat tax increases economic growth, personal income, savings, and net wealth, all of which lead to higher levels of giving. Specifically,