The charitable deduction encourages charitable giving, benefiting communities across the country. Under the current law, a donor who itemizes can take a deduction on his or her charitable gift at the same percentage as his or her tax rate. Congress is considering imposing a cap or limit on the value of the charitable tax deduction as part of an overall effort to EITHER raise additional federal revenue OR make adjustments or “simplifications” to the tax code. But, reducing the charitable deduction is not the solution to current budget concerns. Due to the recession, many communities will deal with residual effects for years to come. The nonprofit sector is part of the solution to address these ongoing needs. We caution lawmakers to consider the consequences for the charitable sector when debating proposals to limit the deduction, whether in the context of raising revenue or simplifying the tax code.
Resources on this:
- Charitable Giving Coalition - The Charitable Giving Coalition is dedicated to preserving a century-old American tradition that provides a tax deduction for taxpayers who give to charities. The coalition’s members represent a unified voice to raise awareness among lawmakers in Washington, D.C. about the value of the charitable deduction and its impact throughout America in providing essential community services.
- Charitable Giving in America Infographic - see the impact that charitable giving makes
- An Open Letter from Economists on the Charitable Deduction
- President’s FY14 Budget, with 28 Percent Cap
- Evaluating the Charitable Deduction and Proposed Reforms—Urban Institute, June 2012