Senate to Consider Tax Reform Legislation This Week

Posted by National Association of Charitable Gift Planners on Nov 27, 2017 8:00:00 AM

This week the Senate will consider major tax reform legislation which will dramatically alter tax incentives for charitable giving.  CGP is asking all members to contact their two United State Senators to advocate for a universal charitable deduction.  Given all that is at stake, the time to act is now.  Background information, a call to action, and suggested talking points are below.  Please reach out to CGP with any questions as this process continues to unfold.  

BACKGROUND INFORMATION:

On November 16, 2017, the House approved H.R. 1, the Tax Cuts and Jobs Act, which would nearly double the standard deduction and eliminate personal exemptions and almost all itemized deductions, among many other provisions.  Although the legislation maintains the current-law charitable deduction (and even raises the AGI limitation to 60% for cash gifts), the vast majority of taxpayers – as many as 95% according to bill sponsors – would no longer itemize their taxes under this plan.  These taxpayers would therefore not be eligible to take a charitable deduction.  In real terms, this means roughly 30 million taxpayers who itemized in 2016 would no longer have access to the incentive and would be taxed on their charitable gifts.  And, if Congress makes these changes, charitable giving would decrease by billions and billions of dollars each year.  The same day the House passed H.R. 1, the Senate Finance Committee approved its version of tax reform legislation that, although different from the House-passed bill in many respects, would also push virtually all Americans to become non-itemizers and thus significantly reduce the full value and scope of the charitable deduction.   

Starting today the full Senate will consider the bill put forth by the Senate Finance Committee.  A number of amendments are expected.  If the Senate ultimately approves a bill, House and Senate leaders will soon meet to reconcile differences with a goal of enacting final legislation by Christmas.

For a more detailed background on tax reform legislation, listen to CGP’s November 21, 2017 legislative update conference call.  

 

CALL TO ACTION:

Given the state of tax reform legislation, CGP is asking all members to call (or, in the alternative, e-mail) their two United States Senators TODAY to: (1) identify the impact tax reform legislation will have on charitable giving in general; (2) explain what this loss of money will mean for the programs and services charities provide in the Senator’s state; and (3) request that the Senator support a universal charitable deduction and communicate this support to Senate leadership.  

 

TALKING POINTS:

Charitable Giving

• Charitable giving allows Americans to create, fund, and operate institutions that are the fabric of our civil society.  It supports nearly every facet of life in our communities: education, research, health services, housing and shelter, job training, arts, culture, environmental protection, historic preservation, civil rights, civic engagement and so much more.

• In 2016, individuals across the country gave an estimated $282 billion to charity, according to Giving USA.

• These charitable dollars are vital to America’s charities, which continue to face tremendous demand for their services

 

The Charitable Deduction

• 2017 marks the 100th anniversary of the charitable tax deduction.  This is a remarkable milestone, and now is not the time to reduce the value of America’s long-standing giving tradition. 

• The charitable tax deduction is unique and good tax policy because it encourages individuals to give away more of their income, investing it in their communities. 

• A calculation of the charitable deduction suggests that those in need receive $2.50 in benefit for every $1 of tax benefit going to the donor. This is an impressive return on investment. 

• But, changes to the tax code currently under consideration would severely diminish charitable giving.  Estimates from the Joint Committee on Taxation and highly-regarded think tanks and universities, including Urban-Brookings Tax Policy Center, Tax Foundation, American Enterprise Institute, and Indiana University, find – report after report – that charitable giving will significantly decline by billions and billions of dollars each year if the charitable deduction is limited or constrained as contemplated by current legislation. 

Our “Ask”

• Tax reform should take good tax policy and make it better – it should include incentives to encourage more Americans to give more money to charity. 

• American voters strongly support incentives for charitable giving. 

• Congress should therefore enact a “Universal Charitable Deduction” or above-the-line charitable deduction that is available to all taxpayers.   

• Regardless of income level, all American taxpayers should receive an incentive to give to charity.  

• This tax incentive should not be tied to itemizing deductions – it should be available broadly in order to:

  • Increase giving, in terms of both dollars and donors;
  • Increase fairness by treating all taxpayers’ contributions equally; and
  • Provide modest tax relief to middle- and lower-income taxpayers.

• And, it would not only offset losses to charitable giving caused by tax reform, it would actually increase giving.  According to an Indiana University study, if provisions in H.R. 1 were enacted into law but Congress chose to allow all taxpayers to take the charitable deduction, overall giving would increase by $1.1 billion to $4.7 billion.

 

About CGP

• The National Association of Charitable Gift Planners (“CGP”), formerly the Partnership for Philanthropic Planning, is a 501(c)(3) public charity representing over 8,000 members with a network of over 100 local councils throughout the country.  CGP members include professionals involved in the charitable gift planning process, including fundraising professionals and administrators, estate planners, financial advisors, consultants, and allied professionals.  

• CGP is the leading organization in charitable gift planning and provides standards and guidelines for the profession, advocacy for a positive legal and tax environment for charitable giving, and education in all areas of charitable gift planning.  

• CGP also convenes the National Conference on Philanthropic Planning, the largest annual conference in the field, and sustains the CGP Leadership Institute which provides thought leadership to practitioners.

 

[1] One version of a universal charitable deduction is H.R.3988/S.2123, the Universal Charitable Giving Act of 2017, which would allow non-itemizers to claim the charitable deduction (over and above the standard deduction) but deduction-eligible contributions from those taxpayers would be capped at a value equal to one-third of the standard deduction (roughly $2,000 for individuals/$4000 for couples under current law; $4,000 for individuals/$8,000 for couples under tax reform measures).  Another version of a universal charitable deduction was proposed by Senators Wyden and Stabenow during the November 2017 Senate Finance Committee mark-up of tax reform legislation.  This amendment would have allowed taxpayers who do not itemize their deductions to take an above-the-line deduction for charitable contributions, subject to limitations that: (1) the maximum deduction would be limited to 60% of modified adjusted gross income, and (2) the value of the deduction would be phased out by 3 percent for every dollar of taxable income above $266,700 single; $320,000 married; $293,550 head of household (for 2018, indexed) with a maximum phase-out of 80 percent of the deduction (similar to the current-law Pease limitation).

Topics: Advocacy