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Congressional Call To Maintain US Charitable Tax Deduction

by Mike Godfrey, Tax-News.com, Washington

28 January 2014


John Thune (R – South Dakota) and Ron Wyden (D – Oregon), both members of the Senate Finance Committee, led a bipartisan group of more than 30 senators in a recent letter to its Chairman Max Baucus (D – Montana) and Ranking Member Orrin Hatch (R – Utah) underscoring the importance of maintaining the charitable tax deduction in any United States tax reform package.

In calling for no reduction to the charitable tax break, the lawmakers are insisting on an exemption to a previous general understanding that all tax expenditures would be on the table in any future tax reform agreement to lower tax rates. In addition, with Wyden expected to become Finance Committee Chairman following Baucus's probable appointment as US Ambassador to China, it becomes even more unlikely that the tax break will be changed in the future.

The lawmakers wrote "to underscore the importance of protecting the full value and scope of the charitable deduction during a comprehensive rewrite of the tax code. The charitable deduction has been an important and effective part of our tax code for almost 100 years."

"The charitable deduction is unique," they added. "It is the only provision that encourages taxpayers to give away a portion of their income for the benefit of others. For this reason, it is not a loophole, but a lifeline for millions of Americans in need."

According to Giving USA, Americans gave more than SD300bn to charitable organizations and itemized donations accounted for nearly USD229bn, in 2012.

The letter concluded that "analysis has repeatedly shown that proposals to cut, cap, or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually. Worse yet, weakening the charitable deduction would most hurt the adults and children who receive vital charitable services. … Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy."

TAGS: Finance | tax | economics | business | fiscal policy | United States | tax breaks | charities | tax reform

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