Senator John Thune (R-SD) presents his amendment to protect the charitable deduction from cuts, caps or limits.
Mar 19, 2013
WASHINGTON, D.C. – Millions of people throughout America are at risk of losing crucial nonprofit services if Congress enacts limits to the century-old charitable tax deduction. Hundreds of foundation and philanthropic leaders are in Washington, D.C. this week to make sure lawmakers understand that unraveling the charitable deduction is not a solution to the budget crisis.
The timing is key as Congress and the president tackle deficit reduction and tax reform. The House and Senate both released their budget plans last week and the proposed Senate budget suggests limits to itemized deductions – one of which is the charitable deduction – putting at risk billions of dollars in charitable donations.
“The charitable deduction is unlike anything else in our tax code, encouraging people to invest in their communities without personal gain,” said Kevin Murphy, president of the Berks County Community Foundation in Pennsylvania and board chair of the Council on Foundations. “Limiting the charitable deduction would have the greatest impact on those who need the most help, especially during tough economic times. How could we possibly limit or tamper with incentives that allow people to give away their income to benefit others?”
by Fred Stokeld
March 1 - Some members of the charitable community, which breathed a sigh of relief at the beginning of the year when the deduction for charitable contributions was largely untouched by the fiscal cliff agreement, are expressing renewed fears that the White House and Congress may again seek to limit the deduction as a way of raising revenue.
A February 28 blog posting by The Philanthropy Roundtable, which opposes limits, points to comments made by Jack Lew, who was recently confirmed as secretary of the Treasury, about the Obama administration’s recurring proposal to limit the value of itemized deductions, including the charitable deduction, to 28 percent. In written responses to questions posed by the Senate Finance Committee, Lew said the proposal would have a modest impact on the incentive to make charitable gifts.
FEBRUARY 15 - Witnesses at a February 14 House Ways and Means Committee hearing said they support extending the charitable contribution deduction to non-itemizers, but only for gifts exceeding a threshold amount.
C. Eugene Steuerle of the Urban Institute told the committee that a floor under the charitable deduction could be used to extend the deduction to non-itemizers but would not have much effect on charitable giving incentives.
Roger Colinvaux of the Columbus School of Law at the Catholic University of America agreed. “I think a floor is very important” because it would eliminate the need to verify small donations, he said.
Eugene Tempel, dean of the Indiana University School of Philanthropy, liked the idea of a non-itemizer deduction and said a floor would be better than a cap. Jan Masaoka of the California Association of Nonprofits said a floor is worth considering because it would reduce giving incentives only for taxpayers who make small donations, she added.
Committee member Linda T. Sanchez, D-Calif., said there is a big disparity between the number of taxpayers who give to charity and those who can claim a charitable deduction. “I think it’s time to think about expanding access” to the deduction, she said.
Reproduced with permission from Daily Tax Report, 32 DTR G-2 (Feb. 15, 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
February 15, 2013
Legislators should tread carefully in considering changes to tax deductions for charities, dozens of their representatives said during a House Ways and Means Committee hearing Feb. 14.
Alterations would lead to less giving and hurt recipients, they said. Several were particularly critical of a proposal from President Obama to cap all deductions for top earners at 28 percent to raise revenue through the tax code, which they said would do more harm than good.
Though the White House and Congress are exploring this and other tax code changes in the context of overhauling the tax code, such reform should sidestep charitable deductions, most of the hearing’s 42 witnesses told committee members during seven panels of testimony.
“Efforts to cap, limit, or even eliminate the charitable deduction would be a dangerous social experiment,” warned Kevin Murphy, chairman of the Council on Foundations, a group that represents about 1,700 grant-making foundations.
Others in the charitable community struck a similar tone during the hearing, which Ways and Means Chairman Dave Camp (R-Mich.) said he convened to get input before the committee begins to consider proposals. More than 1 million charities exist in the United States.
Representatives from the Charitable Giving Coalition testified before a House Ways & Means Hearing on Thursday, February 14, 2013. The hearing was focused on charitable giving incentives as Congress looks forward to tax reform.
Congressman David Camp (R-MI), Chairman of the House Committee on Ways and Means, announced Tuesday that a hearing will be held on February 14th to examine the itemized deduction for charitable contributions. The committee proposed the hearing as an effort towards comprehensive tax reform.
“Public charities and private foundations perform invaluable services for our society,” said Camp in a statement Tuesday. “These organizations depend upon the goodwill of the American people – the most giving and charitable people in the world.”
We agree. The generosity of donors has allowed the philanthropic efforts of Americans to flourish in many different areas, ranging from feeding the hungry to promoting the arts and sciences. We must ensure that giving remains protected.
Individuals and organizations who wish to offer testimony on the deduction are invited to contact the committee’s tax office. The hearing is scheduled to begin at 9:30 A.M. EST in Longworth House Office Building, Room 1100.
For the full announcement, please click here.
WASHINGTON, D.C.— Following the passage of the fiscal cliff agreement, the Alliance for Charitable Reform (ACR) released the following statement:
“ACR is pleased that the charitable deduction was preserved in this agreement. Throughout these negotiations, ACR members and other representatives of the philanthropic community have educated Congress about the value of charitable giving all across our country, especially for those who are in greatest need of services. The charitable deduction has a direct and indisputable influence on charitable giving, and preserving it has been central to our efforts in Washington.
However, ACR is disappointed that the PEASE provision was made permanent in this agreement, which will progressively limit deductions, including the charitable deduction. We encourage members of Congress and the President to continue to preserve the charitable deduction and revisit PEASE as it relates to charitable giving as we move forward into both tax reform and measures to address the federal deficit.”
ACR is a project of The Philanthropy Roundtable and is comprised of nonprofits leaders and groups that serve as a leading voice on opposing legislative or regulatory proposals that could diminish private giving.
“ACR refuses to go along with the White House’s request for charities to insert themselves into the debate over tax rates. Our priority is to preserve and protect the charitable deduction. Throughout his first term, President Obama has proposed reducing itemized deductions, including the charitable deduction, in multiple budgets and other spending proposals, and never voiced concern over the impact of his plan on the charitable sector. Neither the ill-conceived Republican proposal of placing a dollar cap on deductions that would include the charitable deduction nor President Obama’s repeated proposals to limit charitable deductions would be good for charity. They both should be off the table. We should not be forced to choose between two bad options. Charities and those who give to charity should not be forced to enter this political wrangling. We call on Congress and the White House to set aside all proposals to cap or limit the charitable deduction.”
In an expected move, the Senate voted down the Buffett Rule today by a vote of 51 to 45. 60 votes were needed. The Buffett Rule levy’s a minimum tax of 30% on higher-income earners and, for purposes of this tax, eliminates all credits and deductions except for the charitable deduction. By singling out the charitable deduction, supporters of the bill acknowledge that the charitable deduction is different from all other deductions and credits because it is the only incentive designed to encourage Americans to give away their money. However, ACR believes that entrepreneurship and wealth-creation is vital to sustaining charitable giving. A minimum tax levied on high-income earners ultimately leaves them with less to give and it is these Americans that, study after study has shown, give the most. ACR looks forward to many further conversations with decision makers in the coming months about how we can encourage private giving, not reverse it.