If a non tax-payer donates £100 to charity the rest of us do not top up his donation.
If a standard rate tax-payer donates £1,000 to charity the rest of us top it up with “gift aid” of £250 (The charity receiving £1,250 – we contribute 20% of that amount to support the individual’s charity)
If a maximum rate (currently 50%) tax-payer donates £1,000,000 to charity the rest of us top it up with “gift aid” of £250,000 (The charity receiving £1,250,000) and then we give a further £375,000 back to the maximum-rate tax payer to “support his philanthropy” – we contribute 50% of the amount the charity receives.
So the richer someone is, the more we have to support their charitable urges – we have to be charitable to them – at the expense of other things on which our taxes could be spent. How so? Read more…