Charitable Deductions Under Attack
The “charity” deduction was created in 1917 to preserve America’s centuries-old tradition of philanthropy. It is the only section of the U.S. Tax Code that “rewards” a taxpayer for giving their resources away. Tax benefits for charitable contributions and tax-exempt organizations are approximately $100 billion annually.
Unfortunately, some political leaders see the charitable deduction as $40 billion in “lost federal revenue.” President Obama, former presidential candidate Mitt Romney, and the Bowles-Simpson Commission have proposed modifications that would decrease private giving.
Modifying or doing away with the charity deduction will disproportionately harm nonprofits that rely heavily on private giving. Even a 28% cap on charitable deductions, as some including President Obama have proposed, will lower total giving by $9.4 billion annually. Most donors won’t stop giving, but they will likely give smaller amounts and/or less frequently.
Recent Articles and Blog posts:
by Richard A. Epstein (Peter and Kirsten Bedford Senior Fellow and member of the Property Rights, Freedom, and Prosperity Task Force at the Hoover Institution)
“The president’s redistributive effort to limit charitable tax deductions will hurt the poor—and everyone else.”