Coalition Calls on Congress to Protect Charitable Deduction During Tax Reform Debate

WASHINGTON, D.C. – Reducing the value of the charitable tax deduction will hurt America’s communities and millions of people who rely on generous donors,  the Charitable Giving Coalition told congressional leaders. As federal lawmakers deliberate comprehensive tax reform, their actions could unravel the positive impact of the 100-year-old tax incentive that encourages giving.

The Coalition responded to a report by the Joint Committee of Taxation outlining options for tax reform in a letter to Rep. David Camp (R-Mich.), chair of the House Ways and Means Committee and Rep, Sandy Levin (D-Mich.), the committee’s ranking member. The Coalition is unified in an effort to make sure lawmakers clearly understand that giving will decline significantly and communities will suffer if they tamper with the charitable deduction.

“We are particularly concerned about options on the table that would unravel the charitable deduction and hurt our communities,” the Coalition’s letter said. “…certain tax reform proposals would be exceptionally harmful to the charitable sector, in particular, the Administration’s 28 percent cap on itemized deductions, hard dollar caps, converting the charitable deduction into a tax credit, and imposing a floor threshold for charitable contributions.”

The report is part of an effort of 11 working groups that were established earlier this year by the committee to address comprehensive tax reform. It summarizes various options for changes in tax policy, including several that impact the charitable deduction. The Coalition letter makes a strong case that any changes to existing policy will reduce giving significantly and increase economic hardship for communities and individuals in need. For example:

  • A 28 percent cap included in President Obama’s budget proposal would reduce donations by billions of dollars. One study – according to the Urban-Brookings Tax Policy Center – estimates more $9 billion in lost charitable donations.
  • A dollar cap on itemized deductions would likely be exceeded by many taxpayers before they are even able to claim a charitable deduction.
  • Replacing the charitable deduction with a 12 percent tax credit would result in a loss of more than $9 billion per year in donations.
  • Imposing a 2 percent adjusted gross income floor on the charitable deduction would result the loss of $3 billion a year in donations.

“We simply cannot afford to experiment further with deduction for charitable contributions,” the letter continued. “Such a move would severely disrupt the crucial work of nonprofits in our communities – developing medications, improving education and health, protecting the environment, creating jobs, enhancing arts and culture and much more.” The Coalition is a diverse group of more than 60 nonprofits, foundations and other charitable organizations. As part of its ongoing effort to educate lawmakers and the public about what is at stake, the coalition launched ProtectGiving.org last month. This week, the Coalition launched a Twitter account – @ProtectGiving.

As the tax reform debate continues, the Coalition plans to be active in making sure lawmakers understand what is at stake for communities and charitable giving, including through new platforms launched last week. House Ways and Means Chairman Dave Camp and Senate Finance Committee Chairman Max Baucus launched TaxReform.gov, a new website seeking input on the issue. The new website was developed in partnership with the Joint Committee on Taxation and details efforts to address tax reform and engage the public in the debate. In addition to TaxReform.gov, a new Twitter account also launched – @simplertaxes.

 

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The Charitable Giving Coalition
Representing private and community foundations, their grantees and independent charities, the Charitable Giving Coalition’s members include United Way Worldwide, the Salvation Army, Catholic Charities USA, the American Institute for Cancer Research, the Association of Fundraising Professionals, Independent Sector, the Council on Foundations, The Philanthropy Roundtable, among others. Formed in 2009, the coalition is a broad cross-section of nonprofit organizations across the country, including both the nonprofit organizations themselves and the associations and umbrella groups that serve their needs. The coalition is dedicated to preserving the charitable giving incentive that ensures that our nation’s charities receive the funds necessary to fulfill their essential philanthropic missions. The coalition provides a unique and unified voice on Capitol Hill on issues affecting the charitable deduction, a voice composed of both direct lobbying and robust grassroots advocacy. www.protectgiving.org

Congress: No Tax Changes That Hurt Communities, Giving