Feb 5, 2013
Charitable Deduction—Loophole Only for the Wealthy?
As we gear up for a few fiscal deadlines, we have been catching some headlines that reiterate what the charitable sector could be up against over the next four months with the charitable deduction. Of particular note, in an interview Sunday with CBS (video below), President Obama discussed ways to address our pending fiscal situation and the subject of “deductions and loopholes” arose. Deductions often get framed as accounting tricks used by the wealthy to subvert paying taxes. But it’s important to understand that when you hear “deductions and loopholes”, that includes the charitable deduction.
It’s true, the charitable deduction is a tax deduction, which can lower one’s tax bill in exchange for giving to charity. Our country decided, and has had a long-held belief that charity is at the bedrock of what America is all about. It is something we value as a society because it makes our communities better and stronger and we proved it by codifying it in our tax code. In fact the charitable deduction has been in the tax code as long as the income tax.
But the charitable deduction is different from other deductions; it encourages individuals to give away their income to benefit others. The charitable deduction provides hundreds of billions of dollars in donations to charities across America and the world to eradicate disease, feed the homeless, beautify our communities and so much more. Over the past five years, charities have been stretched thin by a struggling economy, with nowhere left to cut. Charities are now faced with the prospect that our elected leaders will choose to finance our debt or resolve our fiscal crisis on their backs.
Going forward in this debate, it’s up to the charitable sector to remind the President and members of Congress that the charitable deduction is not an accounting loophole people use to avoid paying taxes. The charitable deduction provides real and tangible results in all of our communities and we must stop any attempt to tinker, reduce or eliminate it.
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