Jan 23 2014
WASHINGTON, D.C. – U.S. Senator Jerry Moran (R-Kan.) and a bipartisan group of Senators today called on Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) to recognize the importance of maintaining the charitable tax deduction as the committee considers tax reform.
The bipartisan letter to Senate Finance Committee leaders underscores the importance of maintaining the charitable tax deduction as the committee considers ways to reform the tax system. Sen. Moran and his colleagues wrote, “The charitable deduction is unique. It is the only provision that encourages taxpayers to give away a portion of their income for the benefit of others. For this reason, it is not a loophole, but a lifeline for millions of Americans in need.”
In 2013, Americans donated more than $300 billion to charitable organizations, and itemized giving accounted for nearly $229 billion of that figure. Recipient organizations in turn used those funds to generate $1.1 trillion in jobs and services, employing 10 percent of the nation’s workforce.
According to the Charitable Giving Coalition, a proposed cap on the total value of tax deductions at 28 percent for higher income Americans could reduce donations to the nonprofit sector by more than $5.6 billion every year. Without this private support, government and taxpayers will be called upon to operate and pay for the programs currently supported by charitable giving.
The text of the senators’ letter follows:
January 23, 2014
The Honorable Max Baucus, Chairman
The Honorable Orrin Hatch, Ranking Member
Committee on Finance
United States Senate Washington, DC 20510
Dear Chairman Baucus and Ranking Member Hatch:
We write to you to underscore the importance of protecting the full value and scope of the charitable deduction during a comprehensive rewrite of the tax code. The charitable deduction has been an important and effective part of our tax code for almost 100 years.
The charitable deduction is unique. It is the only provision that encourages taxpayers to give away a portion of their income for the benefit of others. For this reason, it is not a loophole, but a lifeline for millions of Americans in need. Analysis has repeatedly shown that proposals to cut, cap, or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually. Worse yet, weakening the charitable deduction would most hurt the adults and children who receive vital charitable services from organizations like soup kitchens, after-school programs, and medical research projects, just to name a few. In many cases, the government would be required to step in and fund those services now being provided through private generosity. Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy.
Indeed, charitable giving is an integral part of our society. In 2012 alone, Americans donated more than $300 billion to charitable organizations and itemized giving accounted for nearly $229 billion, according to Giving USA. The organizations that received those donations then leveraged their contributions through volunteers and other in-kind aid to generate $1.1 trillion in jobs and services, employing nearly 10 percent of America’s workforce.
We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges.
As you contemplate a comprehensive tax reform bill, we understand that all tax expenditures must be reviewed and considered. However, in this context, we ask that you keep our views on this important tax deduction in mind.
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