WASHINGTON, D.C.— The Alliance for Charitable Reform (ACR) issued the following statements upon today’s release of the framework of the Republican tax reform proposal, which preserves the charitable deduction and doubles the standard deduction, among other provisions.
“We applaud Republican lawmakers for proposing to preserve the charitable giving incentive,” said Sandra Swirski, executive director of ACR.
The framework released today specifically states: “In order to simplify the tax code, the framework eliminates most itemized deductions, but retains tax incentives for home mortgage interest and charitable contributions. These tax benefits help accomplish important goals that strengthen civil society, as opposed to dependence on government: homeownership and charitable giving.”
The details of the tax reform framework also include reducing the number of income tax brackets from seven to three – 12 percent, 25 percent, and 35 percent – with the possibility of adding a fourth bracket for the wealthiest taxpayers. Lawmakers also propose nearly doubling the standard deduction to $12,000 for individuals and $24,000 for married filers, taking the charitable deduction away from 30 million taxpayers, which would affect charitable giving. ACR has presented a universal charitable deduction – which expands the charitable deduction to all Americans – as an alternative to protect charitable giving.
“We support lawmakers’ goal of simplifying the tax code and reducing the burden it can be on the American people. In doing so, we also urge lawmakers and the Administration to expand the charitable deduction to all Americans, not just those who itemize. Doing so will unlock additional charitable giving, deliver tax relief to low- and middle-income earners, and provide fair treatment to all taxpayers,” said Swirski.
According to IRS data, doubling the standard deduction would reduce the number of itemizers from one-third of Americans to about five percent, removing the tax incentive for an estimated $95 billion of annual charitable giving. A study released in May by the Indiana University Lilly Family School of Philanthropy also found that removing the charitable deduction for most Americans could reduce giving by as much as $13 billion while expanding the charitable deduction to all Americans could increase charitable giving by nearly $5 billion annually.
In July, ACR met with congressional leadership, advisors to President Donald Trump and Treasury Secretary Steve Mnuchin, and Vice President Mike Pence to discuss issues affecting the charitable sector, such as the potential effect of tax reform on charitable giving.