Will Congress Limit Charitable Deductions?
Senators Wyden, Thune Rally Support for Charitable Deduction
Senator Ron Wyden (D-OR) and John Thune (R-SD) have sent a letter to the Chairman of the Finance Committee, urging that any limits placed on tax deductions as part of tax reform not include limits on the charitable deduction. The charitable deduction is the only provision that encourages people to give away their money, and is critical to non-profit organizations that rely on donations. Some proposed caps would fall particularly hard on organizations accepting large donations -- like donations of land and easements.
Two Things You Can Do to Help
- Urge your senators to lend their support to the Wyden/Thune Letter. The Council on Foundation has set up an easy email action tool or reach your senators at 202-224-3121 and share a copy of the letter.
- Join the Alliance in thanking the Senators for their letter. Please join us in calling or sending a note to these offices to thank them for their support of land trusts and other charities serving their communities. Feel free to use the Land Trust Alliance letters as a model:
The Honorable Ron Wyden
United States Senate
221 Dirksen Senate Office Bldg.
Washington, D.C., 20510
The Honorable John Thune
United States Senate
511 Dirksen Senate Office Bldg.
Washington, DC 20510
"The non-profit sector hasn't really woken up yet to what this will to do charitable deductions."
-- Former White House budget chief Peter Orszag at a November event
Consider this your wake up call.
Prominent Democrats and Republicans have voiced support for proposals to cap itemized deductions, including the charitable giving incentive, in negotiations for a year-end budget deal. A cap on itemized deductions of $17,000, or even $50,000 a year could dramatically reduce all gifts to nonprofits, and would be particularly damaging for large gifts like land and easements.
With your help, we've rallied opposition to a fixed cap, but limiting the benefit of deductions to 28% is still very much on the table, so it is as important as ever that Congressional leaders hear from you today.
Here are four ways you can help:
- Call Congress -- We've produced talking points for your reference (as has Independent Sector), but your senators and representatives care most about local stories. Convey what a decline in charitable giving means to organizations in your community. Any legislator could swing either way on this issue depending on other priorities at risk, so your calls are critical! Dial: 202-224-3121.
- Get your board, supporters and partners involved -- The message is simple: Call and urge Congress to not cap charitable deductions as part of a fiscal cliff deal. Background here.
- Find Sample Letters, OpEds, Talking points and more-- In the Charitable Giving Coalition's Protect Giving Toolkit.
Thank you for your steadfast support of conservation – and thanks for taking action now. Changes to the charitable deduction could change land conservation and the sustainability of land trusts…in a big way. But, with your help, we can make sure that does not happen.
Rand Wentworth Testifies at Charitable Deduction Hearing
Alliance president Rand Wentworth testified on the charitable deduction and what it means for land conservation at a February 14 House Ways and Means Committee hearing. The charitable deduction remains vulnerable as Congress heads into budget negotiations. The Alliance, with your help, is working to preserve the enhanced incentive for conservation easements, as well as supporting tax deductions for other donations to your organization.
- Read Rand Wentworth's prepared testimony
- (Rand at 9:55, Rep. Gerlach at 35:47)
Fiscal Cliff Update
Thanks to your help, the charitable deduction remains largely intact in the fiscal cliff agreement. It does, however, bring back the “Pease Amendment,” which gradually reduces the value of itemized deductions against income exceeding $250,000 (or $300,000 for couples, up from $145,950 when it was last in effect).
- Summary with a detailed explanation of the "Pease" limitation (note)
- Forbes article discussing the limited impact of Pease on charitable giving
Lawmakers heard loud and clear from nonprofits that capping or cutting the charitable deduction did not make sense, but we expect deductions could be at risk again as Congress faces the debt limit and sequestration in the months ahead. Please continue reaching out to your senators and representative with your stories about the impact of the charitable deduction.
Previous Alerts with More Background
- Advocates December 6: Deduction Cap Still On the Table
- eNews Alert December 3: All Charities at Risk from Deduction Cap
- eNews Alert November 28: Deduction Caps Could Cripple Conservation
- Will Congress Cap Charitable Deductions? November 20:
Key Articles Chronicling this Debate
- December 19: Obama Plan Would Spare Charitable Deduction [Chronicle of Philanthropy]
- December 6: Charities Press Congress to Save Tax Deductions [New York Times]
- December 5: Senator Tom Coburn (R-OK) interview on charitable deduction [The Hill]
- December 4: Charities Lobby Congress to Save their Tax Deduction [The Hill]
- December 4: President Obama Interview on Fiscal Cliff Negotiations [Bloomberg]
(remarks on charitable deduction at 3:00 minute mark)
- December 3: A Bipartisan Way to Cap Deductions [Bloomberg Opinion]
- December 2: Fred Hiatt: Paying for charitable giving [Washington Post]
- November 30: The reality of tax reform: Less charity, smaller homes, higher state taxes [Washington Post]
- November 18: The Uneven Bite of Limiting Deductions [Wall Street Journal]
- November 12: Democrats Like a Romney Idea on Income Tax [New York Times]
- November 10: Editorial: Limiting tax deductions [Washington Post]
- Chronicle of Philanthropy's Special Section
- Latest News from Independent Sector
*Note on the ACR description of "Pease" -- It should be noted that this limitation is a fixed amount based primarily on the size of the donor's income. Many donors will feel the full impact of Pease on their "non-discretionary" deductions like mortgage interest and local taxes, effectively leaving the marginal benefit of their charitable deductions undiminished. Consider ACR's example of a couple earning $400,000, who would lose $3,000 in deductions under Pease. It's fairly safe to assume a couple at that income level would have well over $3,000 in deductions for local taxes and mortgage interest anyway, so in effect, they'd still see the full benefit of their choice to give to charity. Even ACR's example of a $2 million earner would feel the impact against his $300,000 in state tax deductions regardless, effectively getting the full benefit of a $300,000 gift. Pease will more substantially impact giving by extremely high-income individuals, especially in places with low state and local taxes.