After many starts and stops over the last 30 years, Congress is poised to complete a comprehensive rewrite of the tax code. The House of Representatives passed its version of the Tax Cuts and Jobs Act on Thursday, November 16. Later that same evening, the Senate Finance Committee completed the amendment process of the Senate version of the bill, advancing it to be considered by the full Senate. The Senate is expected to bring the bill to the floor for a vote the week of November 27, and thereafter the two chambers will have to come to an agreement before the final bill can be sent to the President. The process is now moving rapidly.
The Philanthropy Roundtable applauds Congress’s objectives of economic growth and tax simplification, and we are grateful that both the House and Senate versions of the legislation preserve the charitable deduction for those taxpayers who itemize. However, we are concerned that under both the House and the Senate bills, as a result of the doubling of the standard deduction, 95 percent of taxpayers will be unable to deduct their charitable contributions from their income. Over 30 million taxpayers will no longer have the charitable deduction available to them. This will cause charitable contributions to decline between $12 billion and $20 billion in 2018, according to the best available estimates.
A growing number of Republicans and Democrats are recognizing the reality of these negative consequences and are voicing interest in finding a fix. Charities have rallied behind a universal charitable deduction, or a charitable deduction for all taxpayers, including those who take a standard deduction, as a solution. It would allow lawmakers to expand the standard deduction while also recognizing the gifts of all Americans irrespective of income or itemizer status. It would achieve many of the goals set out for tax reform. Senator Jim Lankford of Oklahoma and Congressman Mark Walker of North Carolina both introduced stand-alone legislation that would create a universal charitable deduction, and Senators Debbie Stabenow of Michigan and Ron Wyden of Oregon pushed for a similar amendment to the Senate tax reform plan, but unfortunately the language has not yet been included in either the House or Senate legislation.
The Alliance for Charitable Reform has been actively engaged in urging lawmakers to preserve and even expand charitable giving in tax reform. However, there is no more powerful voice on Capitol Hill than yours. We are asking nonprofit leaders to contact their senators and urge them to include the universal charitable deduction in the Senate tax reform bill. And even though the House has already passed its version of tax reform, it is still important to also contact your representative and relay the same message. The House and Senate versions of tax reform still need to be reconciled and your elected officials need to understand what the current proposals will do to charitable giving.
Thank you for your contribution to our great civil society. I, along with all of my colleagues at The Philanthropy Roundtable, stand ready to assist you in any way we can. Please feel free to reach out to me at any time.