Latest Advocacy Alert
November 13, 2017
Act NOW! Charitable Giving Policies Up for Votes This Week!
The House and Senate are voting this week on new tax laws that will impact charitable giving for years to come. Orchestras have been contacting their elected leaders throughout 2017, and we're asking you to please reach out once again and join nonprofit organizations nationwide as we urge Congress to help Americans support their communities through charitable giving. At this point, the House and Senate tax reform bills do not include provisions to safeguard against potential drops in giving as fewer taxpayers itemize their returns. The Senate Finance Committee considers its bill starting TODAY and the full House is set to consider its version of tax reform THIS WEEK. With both chambers on a fast track to approve their bills, this is an important time to be heard!
The League's online advocacy campaign makes it easy to send an email to your elected officials, and with the stakes so high, we're also asking that you go a step further. Please also consider calling the Capitol switchboard (202-225-3121) and asking for your members of Congress.
Here is the key request being advanced by the nonprofit sector:
Provide giving incentives for growing ranks of nonitemizers by supporting a universal charitable deduction.
- As the standard deduction is doubled under both the House and Senate bills, the number of those taking the charitable deduction is expected to drop dramatically.
- The Joint Committee on Taxation confirmed that the number of those benefiting from the charitable deduction would decline from 40.7 million taxpayers deducting charitable contributions in 2018 under current law to just 9.4 million taxpayers deducting charitable contributions under the House reform proposal.
- If only 5% of taxpayers itemize their returns, the corresponding declines in giving are estimated to be more than $13 billion per year.
- Congress can take action to ensure that all taxpayers still have an incentive to give by offering a "universal charitable deduction" available to those who do not itemize their tax returns.
- There are growing signs of support. Senator John Thune (R-SD) has introduced an amendment stating that, "Congress should ensure that the value and scope of the deduction for charitable contributions is not diminished during a comprehensive rewrite of the tax code." Senator Debbie Stabenow (D-MI) and Ranking Finance Committee Member Ron Wyden (D-OR) are offering an amendment to create a universal charitable deduction as the Senate Finance Committee considers its bill. Rep. Mark Walker (R-NC) has introduced the Universal Charitable Giving Act in the U.S. House of Representatives.
How else will tax reform affect your organization? The House and Senate bills include many other provisions that will change the rules for nonprofits and alter incentives for charitable giving. Please see our overview of key tax reform policy issues, which we will keep up to date as Congressional action unfolds.
November 3, 2017
- No charitable deduction for growing ranks of non-itemizers: While the charitable deduction is preserved for those who itemize their tax returns, the number of itemizers is expected to fall dramatically as the standard deduction is nearly doubled under the proposal to simplify tax returns. Charitable giving has been projected to decline by up to $13 billion per year if only 5% of taxpayers itemize their returns. In response to earlier proposals to increase the standard deduction, advocates have been seeking a "universal charitable deduction" available to non-itemizers. While the universal deduction was not included in the initial House bill, advocates are asking Congress to adopt this strategy to protect giving.
- Deduction limits eased for itemizers: For those still itemizing their returns, the bill would increase the limit on charitable deductions for cash gifts from the current level of 50% of adjusted gross income to 60%, potentially incentivizing more giving by those who had reached the 50% cap. The bill also would repeal the "Pease limitation," which currently reduces total itemized deductions for high-income tax payers.
- Estate Tax phased out: A hot-button issue throughout tax reform debates, the estate tax would be phased out over six years under the proposal, prompting concerns about the potential impact on incentives for charitable giving.
- UBIT: There is some good news as the House bill does not include previously-considered proposals that would have substantially altered Unrelated Business Income Tax (UBIT) calculations and subjected corporate sponsorships to new UBIT requirements. The bill does include a provision to tax certain fringe benefits offered to nonprofit employees, such as parking, transportation, or onsite gyms.
- Executive compensation: A 20% excise tax would be applied for compensation exceeding $1,000,000 for an organization's five highest-compensated employees.
- Artist Fair Market Deduction omitted: The bill does not yet include a provision long-sought by arts advocates that would allow composers and other artists to take a fair market value deduction when contributing their works to charitable collecting institutions.
- Musical works not treated as capital property: The bill eliminates a provision in current law that allows a taxpayer to treat the sale or exchange of a musical composition or a copyright for their own musical work as a capital gain or loss.
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