In your question you call it 'public money', and while it's true that there would be more tax revenue without the deduction, it's not obvious to me that money t

In your question you call it 'public money', and while it's true that there would be more tax revenue without the deduction, it's not obvious to me that money that goes to a society-agreed-upon charitable cause instead of you personally is really part of your 'income' which is what is being taxed. A similar question applies with state taxes. One possible answer to 'why' question: Assume the tax rate is 50%. If the deduction encourages someone to give money they wouldn't otherwise, now 100% of the donated money is being used for a society-agreed-upon cause instead of 50% of it. In those cases, you could view it as a spending boost if the goal is to have more money spent publicly. To me the more important reason is the different structure of public vs private money. If the government was perfect at directing money wisely, there would be no need for private investment or businesses at all. But sometimes there are advantages to a few people directing a small pool of money, instead millions of people directing an enormous pool of money. You can have a greater variety of projects since not everyone needs to agree. And huge organizations can be less efficient/less likely to be held accountable, since even though there are many stakeholders their attention is limited (relative to the scope of what goes on). I think it's valuable to have a pool of 'risk money' for charitable causes in addition to the much bigger government-directed pool. And keep in mind that money is still directed some by the public with restrictions on what it can be spent on - if those are too lax it might be better to tighten them up than get rid of them all together.