Could US tax reform drive down charitable giving?

Last updated on: June 9, 2017 at 9:42 pm by CNA Daily News

Could US tax reform drive down charitable giving? 2017-06-09T21:42:00+00:00 CNA Daily News

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

Washington D.C., Jun 9, 2017 / 03:42 pm (CNA/EWTN News).- As President Donald Trump and Congress get set to undertake tax reform, some are concerned that Republican tax proposals could lead to drastic reductions in charitable giving.

“I don’t think that it was intended, by any means, that they want to harm charitable giving,” Brian W. Walsh, executive director of the Faith & Giving Coalition, told CNA of research that claims GOP tax reform proposals could give Americans less incentive to make tax-deductible charitable donations. Religious charitable groups like Catholic Charities, USA are coalition members.

Yet, he added, “unintended consequences can be just as damaging as those that are intended.”

Walsh referred to two Republican tax proposals for his claim – Trump’s proposal released in April, and another “blueprint” by House Republicans last summer.

Both feature two policies, doubling the standard deduction and decreasing the highest marginal tax rate from 39.6 percent to 35 percent.

Taken together, these “would decrease charitable giving, including giving to religious institutions, by as much as $13.1 billion (4.6 percent),” research by the Independent Sector predicted.

One reason why this might be, the report explained, is that most Americans use the standard deduction on their taxes because it usually offers them a better rate of return than itemizing their deductions. Charitable giving, if written off on one’s taxes, is part of the itemized deductions.

If the standard deduction is doubled, therefore, even more Americans would take advantage of it and fewer taxpayers would choose to itemize their deductions. This could disincentivize charitable giving.

Religious organizations could see the highest drop in charitable giving under these proposals, the research claimed, as much as a 4.7 percent decrease.

“There remains on Capitol Hill some fuzzy assumptions that religious givers don’t pay any attention to their tax bills,” Walsh explained, adding that “if they have the ability to give more, and the tax code allows them to do so, they’re likely to do so.”

Doubling the standard deduction could bring economic relief to households, The Faith & Giving Coalition concedes. So rather than simply scrapping the proposals, the President and Congress could instead extend charitable tax deductions to everyone, and not just “itemizers.”

That, the report added, “erases that $13.1 billion deficit” and could actually increase charitable giving by as much as $5 billion.

This could decrease tax revenue, Walsh admitted, but in his estimate the change would be small, less than one percent.

Such a policy would be fairer, he said, than the proposed one, because it would enable more lower-income households to make charitable donations.

“Those who tend to be in the lower to lower-middle income classes who don’t itemize today, they right now don’t get any tax relief for their charitable deductions,” he said. Expanding the charitable deduction to everyone would help lower-income households “get the same tax relief for their charitable deductions that people who are in the higher income brackets get.”

And this scenario is advantageous, he argued, because charities do the best work of serving the poor and taxpayers are further empowered to reward those which do the best job.

“The money remains in the hands of individuals who can determine who’s doing the best job providing services to the impoverished, the homeless, and other needy people,” Walsh explained.

Previous Post

June 9, 2017

Suffering will come, but encounter it with prayer, Francis advises

Next Post

June 9, 2017 Combat the world's elitism with inclusion, Pope encourages youth

Browse Our Archives

Select a Category Americas Asia - Pacific Europe Middle East - Africa Uncategorized US Vatican

Select a Month November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012

TAKE THE

Religious Wisdom Quiz

Who was the first Christian martyr mentioned in Acts?

Select your answer to see how you score.

Barnabas James Stephen Philip