Charitable Deduction Report Sparks Debate

The White House recently published a report titled “The Charitable Deduction and the Fiscal Cliff: Why Taking Tax Rates Off the Table Threatens Non-Profits and Charitable Giving.” Notably, in reference to a proposal that itemized deductions be limited to $25,000 in order to bring in more tax money to the government, the National Economic Council’s report declares, “The most prominent dollar cap proposals would effectively eliminate the charitable deduction for up to 13 million households and for as much as 60 percent of currently deductible giving.” 

Key Republicans were quick to remind the public of the Administration’s recommendation that the charitable deduction be limited in value to 28 percent for the highest earners. House Ways and Means Committee Chairman Dave Camp (R-MI) and Senate Finance Committee Ranking Member Orrin Hatch (R-UT) said, “The truth is that the White House plan is the only one that has a cap on deductions.” 

One organization from the charitable giving community, the Alliance for Charitable Reform, denounced both suggestions: “Neither the ill-conceived Republican proposal of placing a dollar cap on deductions that would include the charitable deduction nor President Obama’s repeated proposals to limit charitable deductions would be good for charity. They both should be off the table”

NRB President & CEO Dr. Frank Wright last week sent letters to President Obama and Congressional leaders of both major parties urging them to oppose proposals to diminish the charitable tax deduction, “a public policy that has proven its worth for nearly a century.”  He further stated, “Rather than capping or otherwise constraining this longstanding deduction, the federal government ought to expand opportunities for the charitable impulse of Americans to thrive.”

• Read the full White House report and the response from Rep. Camp and Senator Hatch.
• Find NRB’s letters to the President and Congressional leaders on the charitable tax deduction.

By Aaron Mercer, Vice President Government Relations

Published: December 14, 2012