25 May 2017

Coalition Urges Policymakers to Consider Expanding Charitable Deduction Ahead of Mnuchin Testimony

Secretary of Treasury Steven Mnuchin is slated to appear before a hearing of the Senate Finance Committee today on the president’s fiscal year 2018 budget and tax reform. In preparation of that appearance, the Charitable Giving Coalition, of which ACR is a member, issued a statement yesterday highlighting findings in a recent study on charitable giving and urged policymakers to consider adopting a universal charitable deduction.

“A recent study commissioned by Independent Sector and conducted by Indiana University Lilly Family School of Philanthropy calculated that a universal charitable deduction could increase charitable giving by $4.8 billion per year. A universal charitable deduction would allow any taxpayer to claim a charitable deduction, whether they itemize or take the standard deduction. It simplifies the tax code and promotes fairness,” the coalition wrote in the statement.

The study, conducted by the Indiana University Lilly Family School of Philanthropy, provided estimates of the potential effects of tax policy changes proposed in the 2014 Tax Reform Act by House Ways and Means Committee Chairman Dave Camp (R-MI) and changes proposed more recently by the Trump White House that would affect charitable giving. According to the study, the current tax reform proposals would significantly decrease charitable giving by as much as $13.1 billion (4.6 percent).

“The CGC supports efforts to make the tax code simpler and more efficient. However, it is concerned that there could be unintended consequences for charities if the number of taxpayers who itemize – and can take a charitable deduction – is reduced and giving declines. In response to that consequence, CGC proposes enacting (or expanding) a charitable deduction for all American taxpayers, whether they continue to itemize or take the standard deduction. Simply preserving the existing charitable deduction for itemizers is not enough. By most calculations, an expanded standard deduction will reduce the number of itemizers from one-third of taxpayers to only 5 percent. That translates to nearly 30 million taxpayers who will no longer have the charitable deduction. Because the deduction is a powerful motivator that often prompts larger charitable contributions, this dramatic decline in itemizers translates to a dramatic decline in giving,” wrote the coalition.

The full statement from the coalition can be found here.