I disagree with this. There are only a handful of OSS projects that are acceptable and I don't trust anyone in government to make a decision on which ones to fund with my tax dollars.

If you need funding for a project, go commercial or have a commercial counterpart. The market will decide which ones get funded and which ones don't.

Academic research is funded through taxpayer money, and, as an academic, I can assure you that much of it has a much lower impact than many open source projects.

That becomes a very sticky situation very quickly. What sort of entity would qualify for such money? Would Microsoft qualify for some money for their various open source projects, like F#, or the newly opened .net projects? Would Oracle qualify for MySQL and BerkeleyDB, when they offer a closed-source version for those that can't abide by the open source copyrights?

A better solution for me would be to make the process of becoming a 501(c)3 much easier, so parties can donate easier, and tax-free. I've spoken to a few people who have gone through the process, and it is rather a pain in the butt to get all the requisite paperwork in place, especially if you're just starting out. Making that part easier would in effect do the same thing as fund with tax revenues, while working within the unfortunately byzantine tax system.

Easier to make a website than to change tax law.