This is a thing, definitely, but I don't think it's something we can't talk about and criticize. The fact that this cultural tradition has caused a well-intentioned(ish, if you're rural) tax law to become a big loop hole is a bad thing. I'm certain if they thought this was going to be an issue (with small towns refusing the money) some more reasonable solution could be found.

The town I grew up in, Boston, receives a christmas tree every year from Nova Scotia due to the fact that Boston sent a lot of emergency aide to Halifax and the surrounds after a large explosion there in 1917. Something similar could be done with small towns sending local art and culture items to large cities in free exhibitions to demonstrate what the tax money is benefiting or just as a gift or maybe a small japanese town might sponsor a fair in Tokyo where free plums are available using a portion of the tax money they received. This would be a way to express thanks in a common manner for the sum of the donations made by citizens without creating perverse tax loop holes that are exploited to simply lower the amount of money coming out of your pocket.