• November 1, 2014

Religious Charities Ask Congress To Save Charitable Deduction in Tax Overhaul

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Richard White/Chronicle of Philanthropy

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Richard White/Chronicle of Philanthropy

Members of a newly formed coalition of religious charities visited Capitol Hill last week to persuade members of the Senate to back the charitable deduction as they draft recommendations for a massive federal tax overhaul that must be submitted by Friday.

Lawmakers are working to meet a deadline set by Sen. Max Baucus, a Montana Democrat, and Sen. Orrin Hatch, a Utah Republican, who last month wrote in a letter to their fellow senators that the only tax breaks they plan to preserve as they draft a revision to the code are those that are proven to “(1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.”

In a face-to-face meeting, members of the new Faith and Giving Coalition told lawmakers—including Mr. Hatch and Sen. John Thune, a South Dakota Republican—that the charitable deduction meets that three-pronged standard.

“We feel it’s important that [Congressional] members hear from the faith-based community because of the importance of private giving to what we do,” said Steven Woolf, senior tax policy counsel at the Jewish Federations of North America. “Those are the dollars that really drive our organizations. Some get as much as 90 percent of their revenues from private giving.”

The officials also reminded lawmakers how charities save the government money by providing social services.

“If government had to take over what we do it would be twice as expensive and half as effective,” said John Ashmen, president of the Association of Gospel Rescue Missions.

'You’d Better Speak Up’

The coalition was formed two months ago by Mr. Ashmen’s organization and the National Christian Foundation. Its members include such groups as the National Association of Evangelicals, Salvation Army, and World Vision.

Jonathan Imbody, vice president of the Christian Medical Association, said his organization had not previously lobbied to protect the charitable deduction. But the approach taken by Mr. Baucus and Mr. Hatch spurred his group to join the coalition.

“When you read the letter that says they’re starting with a blank slate,” Mr. Imbody said, “that’s enough to get you going.

“If you want something included you’d better speak up.”

Limiting Deductions

President Obama has failed in repeated efforts since 2009 to impose a 28-percent limit on the value of itemized deductions for such expenses as mortgage interest, state and local taxes, and gifts to charities as a way to help tame the federal budget deficit.

That would be a big change for the wealthiest taxpayers, who now get to save nearly 40 cents on every dollar donated to charity, instead of 28 cents.

Nonprofit advocates say the proposal could reduce donations by as much as $9-billion annually.

The White House estimates that the new limit would generate $321-billion in additional revenue through 2021, according to the Tax Policy Center. Obama administration officials have said that the change would affect single people with incomes of more than $200,000 and married couples with incomes above $250,000. Taxpayers with incomes below those levels who do not itemize deductions would not be affected.

Dig deeper: See the Senate Finance Committee report that details a range of ideas that have been proposed for limiting the deduction.

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