Charities Worried about Cap on Tax Deductions

A coalition of charities has expressed concerns about a Senate budget proposal that could potentially place a limit on charitable deductions.


The group, known as the Charitable Giving Coalition, includes United Way Worldwide, the Salvation Army, Catholic Charities USA, the American Institute for Cancer Research and other organizations. Representatives of several of the groups testified at a congressional hearing last month urging lawmakers not to cap charitable deductions for wealthy taxpayers (see Congress Considers Cap on Charitable Deductions). They are now concerned about a budget proposal approved Thursday by Democrats on the Senate Budget Committee that would raise $975 billion in revenue over 10 years by reducing unspecified tax breaks for the wealthiest taxpayers and largest corporations.

The coalition of charitable groups argued Thursday, however, that any limits to the charitable tax deduction would have profound consequences for communities served by the philanthropic sector nationwide. It noted that while the Senate plan proposes limits or caps on the value of itemized tax deductions, which includes the charitable tax deduction, the Pease provision approved as part of the “fiscal cliff” agreement already limits deductions for certain taxpayers.

“The Coalition is alarmed that the Senate’s proposed budget plan does not protect the unique value of charitable deduction, especially now as communities continue to struggle to overcome a bruising recession,” said Association of Gospel Rescue Missions president John Ashmen in a statement. “We simply can’t afford to chip away at incentives that encourage charitable giving. Doing so will have profound consequences for our communities and vital efforts that heal, educate, innovate and more. “Let’s be clear. The millions of disadvantaged people who need the most support—not donors— will be hit hardest by limits or caps to the charitable deduction. We would put at risk billions of dollars in private donations and just transfer to the government funds that would otherwise go to charity. Elected leaders certainly have to make tough decisions to address our fiscal challenges, but limiting the charitable deduction is no solution. We are determined to make sure lawmakers clearly understand that this century-old tax incentive is unique. It encourages giving, provides no financial benefit to the donor and helps meet critical community needs. The nation’s budget crisis is undeniable, but that is exactly why we should be creating more ways to encourage giving—not less.”


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