A very unhappy 100th birthday for the charitable deduction
This month marks the 100th birthday of the federal tax deduction for charitable giving. That anniversary should be a day of celebration for all that this incentive to give has done for the American people. The underlying policy Congress shouldnt tax money that people give away to help communities remains as valid now as it was in 1917 shortly after Congress began taxing income. But this celebration is marred by the damage proposed in the tax reform framework that the White House and congressional leaders released last month.
Like a magician at a birthday party, their tax reform framework uses distraction to achieve a sleight of hand trick. The magicians left hand swirls a colorful scarf to misdirect attention to the frameworks boast that it retains the tax incentive for charitable deductions. Meanwhile, the magicians right hand stealthily makes billions of dollars in charitable donations disappear by effectively eliminating the charitable giving incentive for all but the wealthiest.
Right now, about 30 percent of taxpayers itemize their deductions and thus can apply the charitable deduction incentive. But in the name of simplification, the framework calls for doubling the standard deduction, which experts estimate would radically shrink the percentage of taxpayers who itemize down to only 5 percent. Ninety-five percent of us would have no tax incentive for donating to the good works we support; the vast majority of us would be taxed on the money we give away for everything from arts to zoos, including houses of worship, disaster relief, human services, education, health care, veterans and more.
Certainly, many people will continue to support the missions of nonprofits they care about. But there is substantial evidence that the charitable deduction tax incentive provides a key motivation for giving more. Just look at the percentage of charitable donations that occur each year on Dec. 30 and 31. According to Network for Good, 9 percent of giving for the entire year happens on those two days.
Further, the Lilly Family School of Philanthropy at Indiana University conducted a study calculating that a proposal like the one found in the tax reform framework would result in a reduction in giving to work in communities of more than $13 billion annually. Other experts peg the loss of giving to good works to be even higher.
http://thehill.com/blogs/congress-blog/economy-budget/356400-a-very-unhappy-100th-birthday-for-the-charitable-deduction
msongs
(67,366 posts)american_ideals
(613 posts)So basically it will still be tax free for GOP donor billionaires to give money to their political "charities" -- Cato/Koch institute, Heritage, Bradley Foundation, George Mason Econ dept.
But Democrats, with their larger number of working class members, will still be taxed.
This is a classic Piketty example-- the rich use their money to make themselves richer. At the expense of the working class. Equality is unstable-- we have to always work to make societies more equal.
https://www.economist.com/blogs/economist-explains/2014/05/economist-explains
stuffmatters
(2,574 posts)Charity will now be defined in our national tax code as: Charity, only by the rich for the rich (and subsidized by everybody else)