Tax reform drive threatens deductions and charity

Excerpted from "Taming the tax code beast," Washington Post column by George F. Will, August 09, 2013 - “Colleagues,” said the June 27 letter to 98 U.S. senators, “now it is your turn.” The letter’s authors are Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), the chairman and ranking Republican, respectively, on the tax-writing Finance Committee. From their combined 71 years on Capitol Hill they know that their colleagues will tiptoe gingerly, if at all, onto the hazardous terrain of tax reform.

Together with Chairman Dave Camp (R-Mich.) of the House Ways and Means Committee, Baucus and Hatch propose a “blank slate” approach, erasing all deductions and credits — currently worth more than $1 trillion a year — and requiring legislators to justify reviving them. Hence the Baucus-Hatch letter, in response to which almost 70 senators sent more than 1,000 pages of suggestions. Although some often were short on specificity, the submissions were given encrypted identification numbers and locked in a safe, as befits dangerous documents.

Baucus still hopes to bring Congress to an “all join hands and jump together” moment, “a tipping point where there is a sense of inevitability.”

Commentary

CMA VP for Govt. Relations Jonathan Imbody: In his column, George Will neglects to note that when Committee leaders put every tax deduction on the table, they opened the door to misdirected assaults on charity. I have been meeting on the Hill this month with U.S. senators (Thune, Hatch and Wyden) and staff on the Senate Finance Committee and the powerful House Ways and Means Committee to convince them not to tax money that people give away to charities. Doing so only transfers money from the hands of citizens and cost-effective charities to the government--and we know how well that works.

Faith-based organizations would get hit hardest under any of the current schemes secretly floated by Members of Congress. Cutting the charitable gift tax deduction would decrease giving and cut an estimated $140 billion in charitable services to needy Americans. Since the government would have to take up the cost for lost social services, any tax revenue gained from cutting deductions would be more than lost to new program costs. The result would be a deeper deficit, bigger government and less efficient and effective care.

Yet the prospect of targeting the charitable gift tax deduction has become alarmingly clear in my meetings with senators and staff. One of the most insidious cuts under consideration would eliminate deductions for gifts to charities such as universities, the arts and churches, which in the opinion of some do not provide sufficient tangible services to be deemed a "public benefit."

The 100-year-old tax deduction for gifts given "exclusively for religious, charitable, scientific or educational purposes" enforces the First Amendment's proscription against government infringement of the free exercise of religion. Imagine the IRS determining which churches and faith-based charities merit approval for tax deductions. Congress should take aim at real tax reform while protecting charity and those who depend on it. Charity is not a loophole; it's a lifeline.

Take Action:

Visit the Freedom2Care website now to learn more and take action on this issue that impacts your charitable tax deductions, charities and, most importantly, the millions of individuals served at home and abroad through American charities.

Use this easy form now to tell your legislators to protect your gift tax deduction, charities and, most importantly, those they serve!

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CMA lobbies senators to protect charitable gift tax deduction

Excerpted from "Religious Charities Ask Congress To Save Charitable Deduction in Tax Overhaul," The Chronicle of Philanthropy, July 22, 2013 -- 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. In a face-to-face meeting, members of the new Faith and Giving Coalition told lawmakers—including Sen. Orrin Hatch, a Utah Republican, 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.

The coalition was formed two months ago by John Ashmen, president of the Association of Gospel Rescue Missions, 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 for government relations with the Christian Medical Association, said his organization had not previously lobbied to protect the charitable deduction. But the approach taken by Sen. Max 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.”

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

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.

Commentary

CMA Vice President for Government Relations Jonathan Imbody: "Behind closed doors, Members of Congress have been proposing charitable gift deduction cuts that would severely harm giving, charities and those they serve. That's why I joined several colleagues from leading nonprofit organizations last week to meet at the Capitol with four U.S. senators and staff, to urge them not to kill tax breaks for donations to charities--a move that would hurt donors, cripple faith-based charities and deprive those they serve of desperately needed services.

"A person gives from the heart, of course, but tax policies can significantly influence how much donors feel able to give. The charity deduction is unique in that it simply acknowledges that a person is giving away income to help others in need. The charitable gift deduction is not a loophole--it's a lifeline.

"With the self-imposed deadline for Congressional action--i.e., a draft bill by the end of the month--fast approaching, we need to explain clearly and quickly why the proposed cuts to charitable giving would harm millions of Americans. Please visit CMDA's Freedom2Care website now to learn more and take action on this issue that impacts your charitable tax deductions, ministries like CMDA and, most importantly, the millions of individuals served at home and abroad through American charities."

Take Action

Use the easy form at CMDA's Freedom2Care legislative action web page to tell your legislators to protect charitable giving