Since 1917 policymakers have recognized the value of the charitable deduction as an incentive for taxpayers to give money in an effort to better society. It must continue as a fundamental tenet of our tax system.
America’s charities are heavily relied upon to provide basic needs and services to struggling communities, which is why maintaining the full scope and value of the charitable deduction is vital to community success. The Alliance for Charitable Reform continues to urge lawmakers to not only preserve the full scope and value of the charitable deduction, but also expand it to include all taxpayers, not just to those who itemize.
Expanding the charitable deduction has become even more important and pressing since the enactment of the Tax Cuts and Jobs Act, which nearly doubled the standard deduction and reduced the number of itemizers to about 12 percent of taxpayers.
All Americans Should Have Access to the Charitable Deduction
Under the current system, the charitable deduction is only available to those who itemize their taxes. A universal charitable deduction would expand the charitable giving incentive to all taxpayers by excluding all charitable gifts from taxation. A universal charitable deduction would recognize the gifts from lower- and middle-income givers that often go to our churches and other local charities providing critical services supporting communities across the country. It is a policy that treats all charitable givers the same regardless of income. Additionally, if the deduction were to be available to all, charities would see an overall increase in giving.
For too long the deduction has been referred to, and defined, as a federal subsidy. Consequently, many federal lawmakers have felt justified in viewing donors’ private, charitable contributions as federal contributions with all the attendant scrutiny and rulemaking. Long ignored, and even forgotten, is a school of thought that the deduction is merely an accounting mechanism to remove from one’s taxable income that which is given to charity, rather than a subsidy that is proffered by the government.
To learn more about ACR’s guiding principles, please click here.