Coalition: Ending Charitable Deduction More Than ‘Dollars-and-Cents’

A new study by the Tax Foundation, a nonpartisan tax research group, does not present the whole picture of the effects of eliminating the income tax deduction for charitable giving, according to the Charitable Giving Coalition.

“The story is much broader than an economic story,” said Steven Woolf, senior tax policy counsel for the Jewish Federations of North America, a member of the coalition. “It’s something that shouldn’t be reduced to 3.7 percent or 100,000 or 200,000 jobs.”

Part of an 11-part series of case studies examining the effects of proposed tax reform, the Tax Foundation’s study found that static revenue gains from eliminating the deduction could be traded for an across-the board individual tax rate cut of 3.7 percent. That change would increase employment by the equivalent of about 200,000 full-time workers, the study concluded.

Simply eliminating the deduction, on the other hand, would reduce GDP by $40 billion and reduce employment by about 131,000 full-time workers, the study found.

Despite the potential economic impact of eliminating the deduction, Woolf said, the more compelling side of the story is how the host of services the charitable sector provides would be affected.

“It’s who we take care of, the meals we provide for those that otherwise wouldn’t have a meal, the shelter we provide, the vocational services that we provide, job training in today’s economy, the cultural opportunities that we provide in terms of the arts, the healthcare services we provide to the most vulnerable among us,” he said. “Just look at the breadth of what the sector does, and I don’t think it’s just a dollars-and-cents story.”

The Charitable Giving Coalition, which represents organizations ranging from art museums to associations to zoos and everything in between, has estimated that for every $1 subject to the charitable deduction, communities reap up to $3 in benefits.

“It’s hard to know exactly what goes into these dynamic estimating models that groups like the Tax Foundation use,” Woolf said. “But I think when we talk about something as bedrock to American society as philanthropy and something that has been part of the tax code for 100 years—a deduction for charitable contributions—to advocate a complete elimination of the charitable contribution is something that is a bit radical and a bit troubling to most Americans.”

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