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Call for Keeping the Charitable Tax Deduction

In the midst of the current discussions in Washington on how to bring about meaningful, comprehensive tax reform is the discussion on whether to eliminate current policy that allows individuals to take a charitable tax deduction for contributions made to qualified nonprofit organizations. The stakes are enormous.

According to Giving USA (>http://www.givingusa.org/), in 2012 it is estimated that Americans donated more than $300 billion to charitable organizations and itemized giving accounted for nearly $229 billion of this amount. The report goes on to say that the organizations that received those donations then leveraged their contributions through volunteers and other in-kind aid to generate an estimated $1.1 trillion in jobs and services, employing nearly 10 percent of America’s workforce.

A bipartisan group of senators, led by Senate Finance Committee members Ron Wyden, D-Ore., and John Thune, R-S.D., sent a letter to Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Orrin G. Hatch, R-Utah, underscoring the importance of maintaining the charitable tax deduction as the committee considers comprehensive tax reform. According to the letter they are quoted as saying:
“…We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges…as you contemplate a comprehensive tax reform bill, we understand that all tax expenditures must be reviewed and considered. However, in this context, we ask that you keep our views on this important tax deduction in mind…the charitable deduction is unique. It is the only provision that encourages taxpayers to give away a portion of their income for the benefit of others. For this reason, it is not a loophole, but a lifeline for millions of Americans in need.”

The lawmakers pointed out that analysis has repeatedly shown that proposals to cut, cap or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually. In many cases, the government would be required to step in and fund those services now being provided through private donations. “Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy,” they wrote.

The letter was sent on January 23, 2014, to the Committee and signed by 33 lawmakers. Thune and Wyden were joined by Sens. Roy Blunt, R-Mo., John Boozman, R-Ark., Barbara Boxer, D-Calif., Dan Coats, R-Ind., Thad Cochran, R-Miss., Susan Collins, R-Maine, Kirsten Gillibrand, D-N.Y., Heidi Heitkamp, D-N.D., Dean Heller, R-Nev., Mazie Hirono, D-Hawaii, John Hoeven, R-N.D., Jim Inhofe, R-Okla., Tim Johnson, D-S.D., Mark Kirk, R-Ill., Amy Klobuchar, D-Minn., Carl Levin, D-Mich., Edward Markey, D-Mass., Barbara Mikulski, D-Md., Jerry Moran, R-Kan., Lisa Murkowski, R-Alaska, Bill Nelson, D-Fla., Jim Risch, R-Idaho, Pat Roberts, R-Kan., Brian Schatz, D-Hawaii, Charles Schumer, D-N.Y., Tim Scott, R-S.C., Jean Shaheen, D-N.H., Debbie Stabenow, D-Mich., Mark Udall, D-Colo., David Vitter, R-La., and Roger Wicker, R-Miss.

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