JFNA Action Alert on Charitable Contribution Deduction

Published on June 2016 | Categories: Documents | Downloads: 31 | Comments: 0 | Views: 242
of 3
Download PDF   Embed   Report

Limitations on charitable giving tax incentives would reduce charitable contributions. As demands on nonprofits continue to increase over the next few years, we must ensure that the tax code continues to promote giving and enables charities to meet the rising demand for critical community-based services. Nonprofits create jobs and leverage economic activity. They account for 5 percent of GDP, 9 percent of the economy's wages and nearly 10 percent of the Nation's jobs. Congress should remove barriers that limit charitable giving to support the nonprofit sector.

Comments

Content

Earlier this week, President Obama proposed to pay for the bulk of the American Jobs Act by limiting the value of certain tax benefits, including the charitable contibution deduction for certain "wealthy taxpayers." For more details regarding the impact of limits on charitable contribution deductions, see our op-ed "Don't Limit Charitable Incentives When We Most Need Them" that appears in EJewishPhilanthropy at http://ejewishphilanthropy.com/don%e2%80%99t-limitcharitable-incentives-when-we-most-need-them/ Shabbat Shalom! William William C. Daroff Vice President for Public Policy & Director of the Washington Office

CHARITABLE CONTRIBUTION DEDUCTION AT PERIL

We urge you to send the attached sample letter below to your Senators and Representative to express your support for the current charitable contribution tax deduction.
Background: For almost 100 years the Federal income tax code has contained a charitable contribution deduction which has fostered private philanthropy--an indispensible source of funding for charities that provide vital and viable alternative to direct government programs. Unlike other tax incentives, the charitable deduction is unique in that it promotes behavior that provides no direct benefit to the donor. Tax policy should encourage charitable giving, especially during times of economic recovery. Charities also represent a significant segment of the economy, accounting for over 5 percent of GDP, 9 percent of wages and nearly 10 percent of the Nation's jobs. Deficit Ceiling Negotiations and the Jobs Act: To help pay for the American Jobs Act and as part of the overall deficit reduction negotiation, the Administration would limit tax benefits for itemized deductions, including charitable contributions, for certain taxpayers starting in 2013. Specifically, for those earning over $250,000 (married) or $200,000 (single), the tax benefit of all itemized deductions, including charitable contributions would be capped at 28 percent. Without such a limitation, a $10,000 donation would reduce taxes by almost $4,000 for someone in the top tax bracket. The Administration proposal would limit the tax savings to $2,800, or an increased after-tax cost of almost $1,200, or about 30 percent.

JFNA concerns with the Administration proposal include:












Numerous bipartisan deficit reduction and tax reform studies confirm that incentives for charitable giving should be an essential component of the tax code. The recent Bowles-Simpson National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center deficit panel conclude that charitable giving incentives must be retained. The 2005 bipartisan President's Advisory Panel on Federal Tax Reform recommended that “the income tax benefit be structured as a deduction to provide incremental incentives to higher-income donors, an important source of charitable donations.” A recent paper issued by the National Bureau of Economic Research concludes there is robust evidence that individuals respond to changes in tax incentives for charitable giving and that the elasticity (or responsiveness) is generally larger for high-income taxpayers. Research conducted by the Center on Philanthropy at Indiana University confirms that tax incentives do stimulate giving. One study of the Administration budget proposal on concludes that it would result in a decline in giving of 4.8 percent or nearly $3.9 billion. Adding artificial caps and phase-outs inserts needless complexity to the tax code, making it more difficult for tax professionals and charitable organizations to provide clear advice to donors. Charities often step in to fill the gap where the government and the private sector are unable to provide adequate services or support. After natural disasters such as Katrina and recent Midwest floods, Congress provided additional incentives for individuals to make charitable donations. Last year, President Obama signed into law a similar provision designed to stimulate charitable giving to Haiti. Rather than limit incentives for charitable giving, we urge Congress to consider such additional relief as the economy continues to recover. Although the Administration proposal would not be effective until 2013, it has been unveiled during an economic recovery when charities are asked to do more with less. Any proposal which would result in a decrease in private giving will have significant negative consequences for America’s charities.

The current negotiations between the Administration and Congress represent a serious attempt to begin to address the Federal deficit and we applaud this overall direction. However, JFNA remains committed to insuring that government policies encourage private philanthropy. For further information, please contact Steven Woolf, Senior Tax Policy Counsel at (202) 736 –5863 or [email protected].

The Jewish Federations of North America represents 157 Jewish Federations and 400 Network communities, which raise and distribute more than $3 billion annually for social welfare, social services and educational needs. The Federation movement, collectively among the top 10 charities on the continent, protects and enhances the well-being of Jews worldwide through the values of Tikkun Olam (repairing the world), Tzedakah (charity and social justice) and Torah (Jewish learning).

Sample Letter Dear Senator or Representative (insert name): On behalf (insert name of organization), I am writing to urge you to protect charitable giving incentives in the Federal tax code, including the current charitable deduction, as Congress considers deficit reduction and the jobs act. The ability of donors to deduct contributions to charity from their taxes is a cornerstone of America's charitable tradition, and an indispensable source of funding for nonprofit organizations that provide vital and viable alternatives to direct government programs. Tax policy should encourage charitable giving, especially during times of economic recovery. Limitations on charitable giving tax incentives would reduce charitable contributions. As demands on nonprofits continue to increase over the next few years, we must ensure that the tax code continues to promote giving and enables charities to meet the rising demand for critical community-based services. Nonprofits create jobs and leverage economic activity. They account for 5 percent of GDP, 9 percent of the economy's wages and nearly 10 percent of the Nation's jobs. Congress should remove barriers that limit charitable giving to support the nonprofit sector. Sincerely yours,

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close