President Obama’s Jobs Proposal
On September 8, 2011 President Obama unveiled his $447 billion proposal to spur job growth. The President proposes to pay for the American Jobs Act of 2011. The offsets include closing a number of corporate tax loopholes, as well as imposing a 28 percent cap on itemized deductions - including the charitable deduction - for individuals earning more than $200,000 a year and households earning more than $250,000 per year. The cap on individual deductions is expected to generate $410 billion in revenue over 10 years.
President Obama's Deficit Reduction Recommendations
President Obama submitted in 2011 formal deficit reduction recommendations to the Joint Select Committee on Deficit Reduction. The "balanced" proposal of tax increases, spending cuts, and mandatory program changes would reduce the deficit by $3.5 trillion over 10 years and includes a 28 percent cap on itemized deductions on high-income earners.
National Commission on Fiscal Responsibility and Reform (The Bowles/Simpson Commission)
The President’s Commission on Fiscal Responsibility and Reform issued its report in December 2010. Commission co-chairs Erskine Bowles and Alan Simpson released deficit reduction recommendations that included a proposal to reform the current charitable deduction and by providing taxpayers a tax credit equal to 12 percent of their charitable donations, but only if they donated 2 percent or more of their adjusted gross income to charity. The Commission failed to reach the 14 votes necessary to move its deficit-reduction proposal to Congress, with a final tally of 11 member votes in support and 7 votes against. Learn more.
"Senate Gang of Six"
A bipartisan group of Senators, the so-called Senate "Gang of Six," consisting of Senators Mark Warner (D-VA), Saxby Chambliss (R-GA), Kent Conrad (D-SD), Richard Durbin (D-IL), Tom Coburn (R-OK), and Mike Crapo (R-ID), released a deficit reduction proposal outline in July 2011 that draws on a number of deficit reduction principles proposed by the President’s Commission on Fiscal Responsibility and Reform. The proposal specifically calls for the reform, but not elimination of, the charitable deduction.
The Rivlin-Domenici Debt Reduction Task Force
The Rivlin-Domenici Debt Reduction Task Force issued its recommendations on November 17,2010, which includes a proposal to eliminate the charitable deduction and, instead, give nonprofits a tax credit equal to 15 percent of any donation received. The Task Force argued that this will “greatly increase the number of taxpayers who receive a subsidy for charitable donations, but will reduce the subsidy rate for upper-middle income and upper-income taxpayers who itemize.”
Blueprint for Economic Recovery and Fiscal Responsibility
Demos, the Economic Policy Institute and the Century Foundation released a joint “Budget Blueprint for Economic Recovery and Fiscal Responsibility” on November 29, 2010, which called for replacing the charitable deduction with a 25 percent tax credit for all charitable gifts, regardless of the donor's income, and available to itemizers and non-itemizers.
House Ways and Means Committee Hearing on the Charitable Deduction
The House Ways and Means Committee held a hearing Thursday, February 14, 2013 to examine the itemized deduction for charitable giving as part of its work on comprehensive tax reform. Forty-two witnesses, including Independent Sector President and CEO Diana Aviv, on 7 panels were invited to share testimony before the full Committee.
Committee Chairman Dave Camp (R-MI) said in his opening statement that he convened the hearing in order to get direct input from the charitable community before the panel begins considering tax reform options that could fundamentally change the current charitable deduction or the way that charitable giving incentives are treated in the tax code more broadly.
Senate Finance Committee Hearing on Tax Incentives for Charitable Giving
In anticipation of the Joint Select Committee on Deficit Reduction's November 23, 2011 deadline for issuing deficit reduction recommendations, the Senate Finance Committee held a hearing October 18, 2011 to examine "Tax Reform Options for Charitable Giving."
IS President and CEO Diana Aviv submitted a statement for the record outlining the economic impact of nonprofit organizations, the incentive effect of the deduction, and urging the Finance Committee to reject proposals that would decrease giving.