We now have more proof that the House tax reform bill would hurt charities and the communities we serve. The Joint Committee on Taxation (JCT) released analysis yesterday finding that House tax reform bill would mean 31 million taxpayers would no longer be incentivized to give through the charitable deduction in 2018. Bottom line: charitable giving will decrease by billions of dollars.
The Tax Cuts and Jobs Act (H.R. 1) currently being debated by the House Ways and Means Committee would retain the charitable deduction, but only for a small percentage of taxpayers who continue to itemize due to other recommended policy changes. That means about 95 percent of taxpayers would not have access to the charitable deduction, which we have seen in countless studies does incentivize people to give more of their money to charity. The sharp decline in those taking advantage of the deduction is confirmed in the JCT report, leaving this powerful incentive as merely a tool for those wealthy few who can still afford to itemize. A study by Indiana University commissioned by Independent Sector earlier this year, suggests that charitable giving would be reduced by $13 billion a year.
Additionally, JCT released an analysis of another provision that would weaken the Johnson Amendment’s ability to protect religious institutions (and the broader sector) from partisan politics. The report found that the limited repeal would cost the federal government over $2.4 billion because we can expect some political donors to shift their contributions to religious organizations, and to take advantage of the charitable deduction in doing so. Yes, this is the nightmare scenario we’ve been warning you about for a number of months. This not only creates problems for religious institutions, but it also raises concerns about the future of the charitable deduction, donor privacy, and the public’s trust in the nonprofit sector.
Independent Sector released a statement today to ensure reporters and other influencers are aware of the devastating impact this bill has on our communities. But the fight continues.
What’s Happening Now and Next
The charitable deduction and the Johnson Amendment are not the only two provisions in the House tax reform bill with implications for the charitable sector. A number of these provisions are highlighted in a summary we released late last week as well as sample talking points.
We are working with our partners across the sector to address these as individual issues and as a part of a whole tax reform bill.
With the Ways and Means Committee expected to conclude work on their tax reform bill today, the Senate Finance Committee will likely release its take on a tax code overhaul by the end of the week. The process is moving very rapidly, and both chambers hope to have bills closer to floor consideration by Thanksgiving.
Your voice has never been more important in this tax reform debate. Members of Congress cannot just hear from infrastructure and other advocacy organizations. They must hear from their constituents – the individuals and organizations in their districts and states. Please take just a few minutes to send a quick message to your Members of Congress about the impact that the tax reform bill or individual proposals will have on your organization and your community.
Visit our action center and add the strength of your perspective today.