ARGUING AGAINST a reform that promises to make the tax system fairer, simpler and less onerous for the great majority of citizens is not a comfortable position for philanthropy. But the people who run nonprofit organizations -- like those who run for-profit companies -- worry about any tax code change that could alter their way of doing business. On the opposite page today, Brian O'Connell, whose organization is leading the charge, sets forth his case against the Treasury bill.

The charitable sector raised a similar hue and cry four years ago, when the 1981 tax bill was being considered. Just as now, estimates by economist Charles Clotfelter and others were cited in support of the argument that lower tax rates would greatly diminish charitable giving by increasing the after-tax cost of such gifts. The 1981 tax cut in facd giving incentives for upper-bracket taxpayers far more drastically than the Treasury's new proposals. But it's worth noting that, despite the intervening recession, the educational and other insitutions that are most favored by the wealthy report record-high total donations.

The Clotfelter model, moreover, has been sharply criticized by other economists because its estimates depend too heavily on observed giving patterns among high-income taxpayers who respond most to tax incentives. Newer estimates by economists Gabriel Rudney and Gerald Auten show much smaller effects from the Treasury plan, especially for moderate and lower income taxpayers.

This is not surprising. People in moderate and lower income ranges accounted for the bulk of charitable giving even though, before 1982, few had any tax incentive at all. At higher income levels tax incentives have more weight -- though probably less than Mr. Clotfelter predicts. In any case, the Treasury proposal retains special incentives for big givers, and these features could be improved somewhat without much cost. Moreover, by removing other tax shelters, the plan would increase giving incentives for many high-income people who now pay little or no tax. For others, lower taxes would mean higher incomes and, as recent experience demonstrates, that promotes more giving as well.

Tax reform would require adjustments by the nonprofit sector and by all other sectors of the economy. But the return would come in better economic growth and higher incomes for everybody. As Mr. O'Connell observes, instincts more noble than tax avoidance are the prime motivation behind charitable giving. The charitable sector would do well to focus more on stimulating those generous instincts and being sure that its members do not abuse that generosity.