“At the heart of the GOP tax plan is a push toward simplification that could have unintended consequences, potentially hurting charities—particularly those that depend on donations from middle-class donors,” writes Carolyn Y. Johnson in Wednesday’s (10/11) Washington Post (subscription required). “To fulfill a long-held promise to make taxes simpler, the plan would end itemization for most Americans who use it today, by increasing the standard deduction. About 30 percent of taxpayers who file returns currently itemize—and the prospect of that change has triggered a strong behind-the-scenes campaign from charities seeking to make sure the tax incentive continues to be used. According to an Urban-Brookings Tax Policy Center analysis … the 45 million households that would itemize deductions under the current rules in 2017 would drop to just 7 million.… The charitable contribution deduction would still be available to the small fraction of people who do itemize—who would tend to be higher-income households. But charitable organizations are concerned that donations will drop.… [One] study found that decreasing the top tax rate and increasing the standard deduction slightly less than the current proposal could cut charitable giving by up to $13.1 billion per year.”
Posted October 11, 2017
