Gang of Six Plan Would Reduce Charitable Deduction

WASHINGTON -- Part of the debt-reduction plan unveiled Tuesday by the Gang of Six would "reform, not eliminate tax expenditures" for charitable giving.

The plan says nothing more about charitable tax deductions, which it lumps in with reforms in health, home ownership and retirement.

Asked what "reform" meant, Senate Budget Committee spokesman Stu Nagurka emailed The Huffington Post, "I don’t have any information that I can share with you."

That being said, an executive summary of the proposal gives a hint at the approach to reform, saying it is "consistent with the recommendations of the Bowles-Simpson fiscal commission." The document called for simplifying the tax code while increasing or maintaining fairness.

Under the current system, taxpayers who donate to charities are eligible for a deduction based on their marginal tax rate. Those in the top bracket currently are allowed to deduct a maximum of 35 percent of their taxable income. Those with more modest incomes get more modest deductions.

The federal debt commission proposed late last year that all taxpayers be given a 12 percent, non-refundable tax credit as long as they contributed at least 2 percent of their adjusted gross income to charity. If they give less than that, they would get no deductions.

Charitable deductions are estimated to cost the federal government about $237 billion between 2009 to 2013.

Comments

[Count of Anjou]

12:38 PM on 07/26/2011

If only they would ELIMINATE ALL DEDUCTIONS for both privitate individuals AND corporations...

[abacuses]

11:04 AM on 07/20/2011

Why shouldn't you limit tax deductions for charitable organizations? After all, the government wants to take care of everyone anyway. Heck, why not just start a government church and begin preaching to us too. You can hire me, feed me, tell me what to believe. I can then be totally reliant on government and forfeit all my self-responsibility. Oh, wait a minute, didn't they try that in the Soviet Union already? I'm sure Obama has figured it all out and learned from that failure. Right?

[extrader]

11:00 AM on 07/20/2011

Typical Washington. None of the details are available to the taxpayers. Just like Obamacare. Pelosi said "We'll pass it first and then find out what's in it".

[lachihuahua]

10:52 AM on 07/20/2011

Sounds like a great way to limit charitable deductions in the future. At a time when some people are struggling to make donations to causes they care about and non-profits are suffering this seems odd. (nn)

[dekehq]

07:39 AM on 07/20/2011

The charitable donations deduction does not "cost" the government anything. A charitable deduction results in a tax saving of 1/3 or less of the amount donated. The Country benefits three times the amount of the tax revenue decline in the form of contributions to good works of our society. Take this away and where do you get the equivalent benefit? Nationalization?