Trump Tax Outline Expected This Week

President Donald Trump is expected to release a tax overhaul plan in the coming days, but the proposal may ultimately be a placeholder until the Administration and Republican leaders align on key details.

The White House has described the release as a broad outline, and while it may not shed light on too many specifics, it is expected to reflect goals previously stated by the president, including lower individual and corporate rates, economic growth, and tax code simplification. The outline will reportedly include a proposal to reduce the corporate rate to 15 percent and will likely call for reducing the number of tax brackets on the individual side from seven to three.

It is unknown how, or if, the outline will treat the charitable deduction. In previous statements, Treasury Secretary Steve Mnuchin has said that the Administration plans to keep the charitable deduction and the mortgage interest deduction in their tax reform plans. However, news emerged last week that the White House may be considering placing caps on deductions to help pay for tax reform. During the campaign, Trump proposed a hard dollar cap on all itemized deductions ($100,000 for individuals; $200,000 for couples). The American Enterprise Institute estimates that such a proposal could lead to a loss of roughly $17 billion in charitable giving per year.

It is also unclear how the Administration’s plans will work with the effort being led by House Ways and Means Chairman Kevin Brady (R-TX) to reform the tax code. While Brady has been working to draft legislation, the Administration’s outline may provide an opportunity for congressional Republicans to fill in more detail.

Independent Sector opposes any effort to cap the charitable tax deduction and views tax reform as an opportunity to, as House Ways and Means Committee Chairman Kevin Brady (R-TX) has said on numerous occasions, “unlock more charitable giving.” We will be watching the Administration’s release closely and post details when they are available.

Visit Giving100.org to learn more about the 100-year tradition of the charitable deduction and how you can help to strengthen and expand this powerful giving incentive.

Jamie Tucker is the director, public policy strategy and operations at Independent Sector.

Types: Blog, Policy Update
Global Topics: Administration, Public Policy, Upswell
Policy Issues: Charitable Deduction, Charitable Giving, Tax & Fiscal Policy