Bipartisan Senate Group Declares Support for Charitable Deduction
January 28, 2014
Last week, the PND news team ("News team, assemble!") picked up an item from the Chronicle of Philanthropy which suggested that the charitable deduction will be preserved in its current from by the 113th Congress.
More support for that idea arrived a day later, when 33 members of the U.S. Senate — 17 Republicans and 16 Democrats — signed a letter authored by Senators Ron Wyden (D-OR) and John Thune (R-SD) calling for the protection of the "full value and scope”" of the deduction. Addressed to Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), chair and ranking member, respectively, of the Senate Finance Committee, the letter applauds the "uniqueness" of the charitable deduction and notes that it "is the only provision [in the tax code] that encourages taxpayers to give away a portion of their income for the benefit of others. For this reason," the letter continues,
it is not a loophole but a lifeline for millions of Americans in need. 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 from organizations like soup kitchens, after-school programs, and medical research projects, just to name a few. In many cases, the government would be required to step in and fund those services now being provided through private generosity. Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy.
Indeed, charitable giving is an integral part of our society. In 2012 alone, Americans donated more than $300 billion to charitable organizations and itemized giving accounted for nearly $229 billion, according to Giving USA. The organizations that received those donations then leveraged their contributions through volunteers and other in-kind aid to generate $1.1 trillion in jobs and services, employing nearly 10 percent of America's workforce.
We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges.
As you contemplate a comprehensive tax refrom bill, we understand that all tax expenditures must be reviewed and considered. However, in this context, we ask that you keep our views on this important tax deduction in mind.
While the action by the thirty-three senators doesn't guarantee anything, it's unlikely, given the vocal support for the deduction in its current form, that Senator Baucus, who is leaving the Senate to become the U.S. ambassador to China, will fold it in to any tax reform legislation he may be inclined to push in his last few months as finance committee chair. With that as a backdrop, it will be interesting to see what President Obama, a longtime supporter of capping the charitable deduction, says about it (if anything) in tonight's SOTU address.
What do you think? Should the charitable deduction be preserved in its current form? Inquiring minds want to know....
-- Mitch Nauffts