God loves a cheerful giver (but Uncle Sam is not so picky)

South Bend, Ind.--The older woman clearly isn't happy. All she wants is to get rid of the avocado-green sofa that's taking up space in her garage. Joe Brown, the driver of the Salvation Army's collection truck in South Bend, tries to explain to her that he can't take the damaged sofa because it has no resale value; no, he adds, the Salvation Army can't "just fix it up"; they no longer do upholstery work; she'll have to call the city to come haul her sofa away.

The donor's day isn't a total loss, however. She does manage to unload on the local charity an armchair done in a truly ugly velvet brocade. It's unsteady on its feet and wet from being left out in the rain, but Mr. Brown agrees to take it. He also gives in on a metal patio table with a single chair. In a few spots, the original white paint on both items actually shows through the rust.

"Thank you, ma'am," Mr. Brown says, loading the stuff into his truck. "Have a nice day."

"Where's the [expletive deleted] trash can?" she scowls, scanning the street for her wind-tossed receptacle. Then she shuffles off without saying good-bye.

If "charity suffers long, and is kind," then certainly the Salvation Army's Mr. Brown and his assistant, Antonio Richardson, qualify for heavenly rewards; as for this South Bend donor, she already has hers: a pink receipt from the Salvation Army acknowledging her gift of junk. There's no value written on the slip of paper; federal law says she gets to fill that in herself, using whatever figure her conscience-and the threat of a future audit-will allow.

"I try to take whatever I can," Mr. Brown explains back in the warmth of the truck. "Something like that sofa, it's too big for us to get rid of, and nobody's ever going to buy that thing. The chair, it's pretty bad, too, but at least it's smaller. I took it to make her happy. Some people, when you refuse to take their stuff, they'll say, 'Well that's the last time I'll ever give to the Salvation Army.' It's really a shame people think like that. They don't understand what it's all about. So I took the chair, and maybe she'll call us back again when she has something better. I don't think we can use it, but we've got a big trash compactor back at the Center. It'll crush anything."

The same might be said of the current, crushing federal tax system. But with just a week left in this 1996 tax season, almost everyone in Washington, D.C., and beyond agrees that the nation's massive "tax compactor" must go, or at least be reinvented. Calls abound for a "fairer, simpler" tax system that considers the average American.

Some advocate a "flat tax," in which every adult American would be taxed at the same rate on income above a certain minimum; House majority leader Dick Armey (R-Texas), Jack Kemp, who headed a Senate tax-reform task force, and former Republican presidential candidate Steve Forbes have proposed a 17-percent version. Another idea is a national sales tax, championed by House Ways and Means Committee Chairman Bill Archer (R-Texas). Such a tax would scrap the current tax deductions in favor of applying a tax on the sale of every consumer product; advocates say it would hit everyone equally.

The best-known biblical taxes, of course, were flat. Pharaoh accepted Joseph's advice to take 20 percent of every Egyptian's harvest during the seven fat years, as preparation for the seven thin years to come. God's divine tax, the tithe, is 10 percent.

Some now are arguing for yet another, more radical, option: Scrap the current system for one with a flat tax plus a tax credit or partial tax exemption offered to those who give time and money to help the poor. The goal here is to decentralize the welfare system by requiring the better-off to fund anti-poverty efforts, but allowing individual taxpayers rather than Washington administrators to choose where taxpayer funds should go.

Whatever a revamped U.S. tax system might look like, Americans may soon be debating whether to part with the charitable tax deduction. Begun in 1917, that deduction has given American citizens incentives beyond the purely charitable to give to a variety of organizations.

But seven of 10 taxpayers do not even itemize deductions, and those who do are typically in 15 or 28 percent tax brackets, although the percentage goes up to 39.6 for highest-income citizens. The rich are given much greater financial incentives to give than are the poor.

The range of motives behind why people give today is as varied as the quality of items Mr. Brown's truck picked up during his swing through South Bend's donor community, where some hearts were altruistic, and some most definitely weren't.

Stop number seven of 19 along this Salvation Army pick-up route appears the most promising so far. It's a classy neighborhood with big, Cape Cod-style houses, fenced yards, and two-car garages. The owner appears at the storm door as Mr. Richardson heads up the sidewalk. She shakes her head with a frown and motions toward the two-car garage where three black garbage bags await. While the bags are being loaded onto the truck, Mr. Brown approaches the front door, holding the receipt out in front of him like a passport.

This time the homeowner gives a slight nod. The door opens a crack, the pink slip of paper passes through, and then the homeowner disappears. A good deed has just been done, but there's something sterile about it-a sense that some people give only to get. When owners hand over items still in good condition to organizations that require the able-bodied to work in order to receive the items, a modern version of the biblical practice of gleaning is achieved-but both givers and receivers today often fall short of the mark.

The philosophical debate today over the relationship of taxing and charitable giving breaks along two lines-both conservative. In the first camp, the current charitable deduction system would be axed at the root-most likely either by a flat tax or national sales tax-on the grounds that government shouldn't be telling people how to spend their money. Let people keep more of the money they earned and chunks of it will be spent altruistically, this theory goes. The second camp argues that the current tax system should be prudently pruned or altered to continue offering people tax-related inducements to rise above their own self-centeredness and help others.

Stop number seven helps make a case for those in the second camp who say removing all charitable giving incentives, especially in these days of massive social restructuring of the nation's welfare system, could be costly. Family Research Council's vice president for policy, William Mattox, represents this camp. "Congress should do nothing that might have the effect of undermining public support for dismantling the welfare state," says Mr. Mattox. "Not only does this argue for the retention of charitable contributions, it actually argues for the expansion of them."

According to Independent Sector, a Washington, D.C.-based coalition of charities, 32 million itemizers gave about $63 billion to charity in 1993. The group estimates that if deductibility were eliminated, "this level of giving would likely have been more than $20 billion lower."

But the other camp, represented by Rebecca Schaefer of Citizens for a Sound Economy, asserts a flat tax would stimulate giving, not stifle it. She recalls that critics of tax reform in the 1980s predicted tax reductions under President Reagan would spell charitable giving disaster; yet when taxes were lowered in 1986, Americans' charitable giving increased along with their incomes. "This is because individuals would have more money in their pockets to donate to their favorite cause," says Ms. Schaefer. "During the 1980s the real rate of annual giving increased by 5.1 percent, compared to an annual giving rate of just 3.3 percent during the 1970s."

It's 11:30 a.m. Time to make one more stop before heading back to the Center for lunch. The house is massive and beautiful, nestled in a bend of the St. Joseph River. Lawsona Gibson, 59, steps out from behind the glass storm door and actually accompanies Mr. Brown into the garage. She pops the trunk of a pearl-white Lincoln Town Car to reveal enough designer clothes to fill a small boutique.

Mr. Brown hands her a receipt. She lays it aside absent-mindedly while she chats with the two Salvation Army workers. Finally, while both men are loading the truck, she's asked whether she plans to keep the receipt for tax purposes. "Probably, unless I lose it," Mrs. Gibson answers, patting her pockets and glancing around the garage as if she has already done just that. "We donate once or twice a year, and sometimes I lose the receipt, so I can't use it."

"Thank you, fellas," she calls after she's relieved of several hundred dollars worth of good clothes. She slams the trunk of the Lincoln and heads back inside. She doesn't stop to pick up her receipt, which is barely visible under a stack of magazines in the garage.

A 1994 Independent Sector survey suggested the main motivating factors among those who donate either money, goods, or time and service to charities is not to get a deduction. The study, titled "Giving and Volunteering," revealed: 88 percent say they give because of personal door-to-door solicitation; 87 percent because of their own past volunteer work experience; 85 percent because they frequent religious services; 81 percent because a friend asked; 80 percent because others have helped them; 79 percent in order to make a significant social change; and 63 percent because a clergy member asked.

As for Mrs. Gibson, she doesn't seem terribly concerned one way or the other about her donation receipt. "We don't give so much for the tax deductions, we try to give what's needed. Like those heavy winter coats, I feel like somebody around here can use those. A change in the tax laws wouldn't matter that much to me."

For 38-year-old Kim Wendowski, however, the current opportunity to get a charitable deduction is, literally, a Godsend; for people like her, taking it away would certainly matter. Mrs. Wendowski is in her garage-dressed in her Mickey Mouse flannel pajamas-pushing boxes and bags out into the driveway when Mr. Brown arrives.

Yet he can't find a pick-up slip for her; the Salvation Army office must have forgotten to list her on his schedule, so he can't write her a receipt, which she definitely wants. He assures her they'll mail a receipt.

Getting a tax deduction for her charitable contributions is important, Mrs. Wendowski notes. Her husband has a factory job and she waitresses at Red Lobster, so the Wendowskis watch their money carefully. But at the same time, they don't just give to get a deduction. "I've got five girls, and I know I can't afford to buy brand-new clothing, so I feel like it's helping someone. We also give to Goodwill and we give at church, of course. I don't think a new tax law would make that much difference. We do it either because it's biblical or because we just feel like we should because we've been blessed."

Christian CPA Daniel Busby, author of the yearly Zondervan Church and Nonprofit Organization Tax & Financial Guide and the Minister's Tax & Financial Guide, says taking deductions is good stewardship: "The only person that doesn't get their money out of it is the federal government."

Yet deducting for charitable giving under the current system can be a jumble of confusion for plain folk, and has definite legal limits that don't coincide with the full biblical charge for issuing charity. Charlie Germany, CPA with Ronald Blue and Company in Atlanta, and a former IRS agent, notes some of the complications currently involved with deducting charitable gifts: (1) individuals giving time or services can't get a deduction, except for out-of-pocket expenses; (2) cash contributions require proof via a receipt, canceled check, or other written evidence; (3) other kinds of contributions require a written record from the charity listing the date, location, and description of the contribution; (4) if a contribution exceeds $500, another form must be filled out; (5) if it exceeds $5,000, yet another must be filed.

Furthermore, notes Mr. Germany,

"under ... new law, ... canceled checks are no longer considered substantiation for each and every donation of $250 or more"; a specific written record from the charitable organization is necessary. Moreover, while charities such as the Salvation Army are required by law to give donors a receipt listing the items they donated, law says charities don't have to estimate value; givers alone must provide the IRS a value estimate of a gift they deduct; when a gift is thought to exceed $5,000 in value, donors also must provide a certified appraisal.

Given such technicalities, and the greater value that deductions have as incomes (and marginal tax rates) increase, it is easy to understand why some people see charitable deductions as of greatest interest to the wealthy. IRS figures show that while those with low incomes ($10,000 to $15,000) in theory have no limit on what they can deduct, in practice they would have to give away almost half their income before they could itemize their deductions. Upper incomers ($100,000 to $200,000), by contrast, can deduct between $20,000 and $40,000, and the rich ($1 million and up) can deduct more than $100,000 in charitable giving.