02 December 2017

ACR Statement on Passage of Senate Tax Reform Bill

WASHINGTON, D.C.— The Alliance for Charitable Reform (ACR) released the following statement upon passage of the Senate version of the Tax Cuts and Jobs Act.

“We applaud Congress’ objectives of economic growth and tax simplification in tax reform, and we are grateful that both the House and Senate versions of the legislation preserve the charitable deduction for those taxpayers who itemize. However, 95 percent of taxpayers will be unable to deduct charitable contributions from their income under this bill as a result of doubling the standard deduction. Over 30 million taxpayers will no longer have the charitable deduction available to them, which is estimated to cause charitable contributions to decline between $12 billion and $20 billion. We encourage lawmakers to include a universal charitable deduction in the final version of the bill so tax reform doesn’t come on the backs of our charities,” said Sean Parnell, vice president of public policy at The Philanthropy Roundtable.

Similar to the tax reform bill offered in the House, the Senate version doubles the standard deduction, greatly reducing the number of individuals who will itemize to about 5 percent of Americans. Analysis from the Joint Committee on Taxation confirmed last month that this would remove the tax incentive for $95 billion in annual giving. Analysis from the Tax Policy Center determined that this would equate to a $12-$20 billion drop in charitable giving, and research released in May by the Lilly School of Philanthropy at Indiana University estimated as much as a $13 billion drop in giving as a result of provisions proposed in tax reform.

Charities have rallied behind a universal charitable deduction as a solution to protect against the unintended consequences of an expanded standard deduction. One legislative option available to lawmakers is the Universal Charitable Giving Act of 2017, which was introduced by Rep. Mark Walker (R-NC) in the House and Senator James Lankford (R-OK) in the Senate. The legislation would expand the charitable deduction to all Americans.

“Expanding the charitable deduction to all Americans is a simple solution to protect charitable giving and avoid forcing our charities to reduce their services to our communities. We urge lawmakers to consider adding the universal charitable deduction to tax reform before final passage of the bill by both houses of Congress,” said Sandra Swirski, executive director of ACR.