April 5, 2014

​Tax Reform Proposal Threatens Charities

Charities could face dwindling donations if Congress
adopts a new tax reform proposal introduced by Rep. Dave Camp, R-Michigan,
chairman of the House Ways and Means Committee.

Camp's long-awaited plan to overhaul the tax code,
introduced last month, has received some positive reviews, but charitable
organizations say it could cost them billions in donations.

"I know Chairman Camp wants charitable giving to go
up, [but] his discussion draft does not [promote] that," said David Wills,
president of the National Christian Foundation (NCF). "It hurts charitable
giving significantly."

NCF is part of the Faith and Giving Coalition, which
along with the Charitable Giving Coalition and other groups has
been lobbying to preserve the current charitable deduction as part of tax

Russell Moore, president of the Southern Baptist Ethics
& Religious Liberty Commission, told Baptist Press that any tax reform
legislation passed by Congress should encourage rather than discourage
charitable giving.

"The worst thing we could do as a country in this
case is dis-incentivize the very giving that meets human needs," Moore
said. "What we need is more giving, not less."

In testimony before the Senate Finance Committee in
2011, Moore said legislators should not evaluate charitable giving merely in
terms of its "economic impact." Giving to the arts, religious
organizations and charities promotes America's flourishing, he said.

Being "other-directed" through charitable
giving "is a signal and a building of a fabric for the next generation
that teaches and shows that there are things more important than simply the
abundance of our possessions," he told the Finance Committee.

Nonprofit leaders applauded Camp's proposal for
preserving the charitable deduction -- since some on both sides of the aisle
wanted to do away with it. But they expressed concern over several specific
provisions, especially the 2 percent floor on charitable giving, which the
Congressional Budget Office in 2011 estimated would reduce charitable donations
in the United States by $3 billion annually.

Under current law, any tax filer who opts to itemize can
deduct charitable donations of any amount up to 50 percent of Adjusted Gross
Income (AGI). Camp's plan would only allow deductions above 2 percent and below
40 percent of a filer's total AGI.

"They're shrinking and shrinking and shrinking the
pie of people that can basically use the deduction for charitable giving, and
that's not good," Wills said. "We actually want to expand the number
of people who can exclude charitable giving from their income."

The plan also aims to dramatically reduce the number of
people submitting itemized tax returns, primarily by increasing the standard
deduction from $6,100 for single filers and $12,200 for married taxpayers
filing jointly, to $11,000 and $22,000 respectively. According to a
Congressional Research Service report released last month, 32 percent of all
taxpayers itemized their returns in 2011 -- with 63 percent of those coming
from filers who earned under $100,000. The Camp plan aims to get the total
number of itemized returns down to around 5 percent.