November 22, 2017
    Proposed changes could mean billions less in giving, but there might be a fix
    05/18/2017

    Charitable giving will go down by $13.1 billion under proposed changes to U.S. tax policy, but adding another type of charitable deduction would not only offset that loss, but generate millions more in giving.

    That is the finding of new research conducted by the Indiana University Lilly Family School of Philanthropy for Independent Sector.

    The research used the 2014 Tax Reform Act introduced by then House Ways and Means Committee Chairman Dave Camp, R-Mich.. The administration’s tax proposal released last month, and Republican legislators’ tax proposal both mirror the Camp proposal with respect to reducing the top marginal tax rate and increasing the standard deduction.

    But researchers also found that adding a charitable deduction for nonitemizing taxpayers to the policy proposals would likely more than offset the loss in charitable giving from the proposals and generate up to $4.8 billion in additional charitable giving.

    Key findings of the report:

    • Extending the charitable deduction to non-itemizing taxpayers by itself, without other proposals, could generate up to $12.2 billion in additional giving.

    • Reducing the top tax rate to 35 percent and increasing the standard deduction combined have the potential to reduce charitable giving by up to an estimated $13.1 billion.

    • The study estimates that those two proposals combined would reduce charitable giving to religious congregations by up to 4.7% and reduce giving to other charitable organizations by up to 4.4%.

    • Each of these proposals alone (reducing the top tax rate and increasing the standard deduction) also would reduce charitable giving.

    • Adding a non-itemizer deduction while lowering the top tax rate to 35 percent and increasing the standard deduction would likely more than offset the amount of charitable giving that would otherwise be lost under those two proposals, generating an estimated additional $4.8 billion in giving, beyond the offset.

    To download the report, click here

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