The Council supports the President’s proposal to simplify the private foundation excise tax to a single flat rate. Together with our members, we have long argued that a single flat rate will simplify tax compliance, eliminate a substantial tax burden, and free up resources for increased community investments. While we support the goal of simplification, we would prefer to see a flat rate of one percent, the rate proposed in the bipartisan “America Gives More Act.”
Since 2009, President Obama’s budget has included a proposed 28 percent cap on itemized deductions, including the charitable deduction. The Council and its nonprofit partners have repeatedly expressed disappointment with proposals to limit the value of the charitable deduction, which is a proven way to strengthen communities. The charitable deduction encourages philanthropic activity and creates a powerful incentive for donors who want to support people in need. Capping it would have a cascading negative impact on the charitable sector in the U.S. and globally. If donors have less incentive to give, donations will decline by billions of dollars—cutting a lifeline for millions of Americans.
The President’s proposal also includes a troubling reduction of the value of a gift of appreciated property, such as a stock, (down from 50% to 30% of adjusted gross income) to a public charity such as a community foundation.
As the federal budget process moves forward, the Council will continue to engage policymakers and elected officials in our role as the voice of philanthropy in Washington.