Ending tax break will put strain on charities' work
Saturday, December 2, 2017
The Food Bank of the Albemarle has been fielding calls this week from our supporters and donors who are concerned for the future of charities if the charitable tax deduction is eliminated in the current tax reform proposals before Congress.
Feeding America has been providing leadership to 200 food bank members across the country, sharing details with us concerning the impact of this legislation on charitable giving. The tax reform bills include changes to the standard deduction and itemized deductions that would effectively eliminate the charitable deduction for many taxpayers, a provision in the tax code that has for more than a century encouraged gifts to charity.
The Joint Committee on Taxation has concluded that the changes in H.R. 1, which while not identical to the Senate legislation are very similar, would result in 30 million fewer taxpayers claiming a charitable deduction each year, and that the amount claimed would decline by nearly $95 billion. Earlier this year, an Indiana University study found that changes similar to those in the Tax Cuts and Jobs Act could cause annual charitable giving to decline by approximately $10 billion.
According to the National Center for Charitable Statistics, individual giving represents 72 percent of all contributions given to nonprofit organizations.
Once passed, the separate House and Senate bills will go to conference committees to reconcile wording, dropping a House provision there, adding a Senate provision here. Generally, they split the difference on allocated funds. However, right now amendments to the Senate tax plan would repeal or weaken the Johnson Amendment, which protects churches and charitable nonprofits from partisan politics.
We are equally concerned about the debt increase resulting from the tax code changes and the fact that the bills do not provide relief to low-income families. Historically, increased federal spending results in disproportionate cuts to programs intended to help those most in need.
As a nonprofit leader, we are optimistic that taxpayers will quickly realize that losing the charitable tax deduction shouldn’t mean they have lost the incentive to support the charities they are passionate about. Charities need the public and private sector to continue supporting essential programs and services that feed the hungry, provide domestic violence intervention, offer shelter nights for the homeless and/or deliver important services during a natural disaster as well as countless other programs and services that are not offered by federal safety net programs.
Charities like Food Bank of the Albemarle will continue to provide the critical services in our community that support your friends, co-workers, neighbors and their families when they need a helping hand, no matter what the outcome on federal tax reform. Yet, these reforms will cause a tremendous strain on the Food Bank as the number one safety net for those who do not know where their will get their next meal.
Liz Reasoner is executive director of Food Bank of the Albemarle in Elizabeth City.