Protecting Taxpayers and Encouraging Charitable Giving: the Charitable Giving Tax Deduction Act
Amid fresh reports that charitable giving could drop precipitously for 2018 because of the changes to the tax law, Rep. Chris Smith (R-NJ) is calling attention to a bipartisan remedy he proposed this year and will reintroduce at the beginning of the 116th Congress.
Smith’s Charitable Giving Tax Deduction Act would allow taxpayers to write off charitable donations to organizations that volunteer and assist those in need, whether or not they choose to itemize on their taxes.
“Charitable organizations—including homeless shelters, soup kitchens, after-school programs, churches and synagogues—depend upon the generosity of many American taxpayers to continue serving those most in need. Yet with last year’s changes to the tax law many charities are facing the unintended consequences of the new policy—what could be a steep drop in donations. Just yesterday, USA Today reported concerns of organizations that say charitable giving in this year alone could decline by as much as $20 billion,” Smith said.
“My legislation would help remedy this problem, allowing all those who wish to donate to charity to do so whether or not they itemize, thus protecting taxpayers while encouraging continued support for groups assisting the vulnerable among us,” Smith said. “I plan to reintroduce this legislation in the coming Congress and look forward to its bipartisan support and swift passage.”
Studies including the American Enterprise Institute’s “Charitable Giving and the Tax Cuts and Jobs Act” report predicted that charitable giving would significantly decline in 2018, due to an increase in the standard deduction in the 2017 Tax Cuts and Jobs Act which would result in many taxpayers no longer choosing to itemize on their taxes, which would include being able to write off charitable donations.
In May of 2018, Rep. Smith introduced HR 5771, the bipartisan Charitable Giving Tax Deduction Act—which he plans to reintroduce in the 116th Congress. The legislation would make charitable tax deductions universal and “above-the-line,” providing maximum relief for those looking to donate to tax-exempt charitable organizations. The amount of charitable contributions would not be capped under the legislation.
Smith’s 2018 bill has cosponsors from both parties as well as support from a consortium of charitable and faith-based organizations and philanthropic networks.
The AEI report estimated that provisions like those in Smith’s bill, HR 5771—which allowed taxpayers who took the standard deduction to also be able to deduct their charitable contributions—could boost charitable giving by $21.5 billion, offsetting the estimated charitable giving shortfall by several billion dollars.
Charitable organizations that supported Smith’s legislation included Agudath Israel of America, the Orthodox Union, the New Jersey Catholic Conference, United Way Worldwide, the Animal Welfare Institute, the Council on Foundations, the National Association of Charitable Gift Planners, the Faith & Giving Coalition, the American Littoral Society, the New Jersey YMCA State Alliance, the Alliance for Charitable Reform, Independent Sector, and the Humane Society Legislative Fund.