Keep the charitable deduction, please
U.S. Senators Baucus and Hatch, who lead the Senate Finance Committee as chair and ranking member respectively, have called on their Senate colleagues to propose ways to improve the income tax code, starting with a blank slate and building from there. Rep. Camp, who chairs the Committee on Ways and Means in the House, has also signaled that tax reform is high on the House’s agenda this year. Further demonstrating their commitment to tax reform, Senator Baucus and Rep. Camp recently held a hearing in St. Paul, the first of several such events they’ve set to gather perspectives on how the tax code should be changed – the first time in over 30 years that they’ll try to do major reform to the federal tax code. In a joint statement, the legislators said “We are engaging the American public in a national conversation on how to fix the tax code. That is why we are here in St. Paul, meeting with leaders in business — big and small. We want to hear how we can improve their experience with America’s tax system.”
We applaud lawmakers’ efforts in this regard – maybe it will reduce the complexity in its 4 million words. We sincerely hope that their efforts do not undo a long-standing public policy of encouraging charitable giving in America. To that end, Philanthropy Ohio is urging Ohio’s members of the House and Senate to retain the current deductibility of charitable contributions. It has been a significant component of the tax code for nearly a century and clearly has significant, positive impacts on the economy and our communities.
The charitable deduction is vital to a strong economy and thriving communities in Ohio. The state’s nonprofits employ nearly half a million people – about 10% of Ohio’s workforce – and they earn over $18 billion in wages. It is estimated that these wages translate into about $500 million of personal income tax revenue for state and local government and over $1 billion in federal tax revenues.
Encouraging charitable giving helps ensure a fairer tax code. According to IRS data, people at virtually every income level use the charitable deduction to reduce their tax payments. This is clearly true in Ohio, where 26% of those reporting such donations made less than $50,000 in income and 67% made between $50,000 and $200,000.
The charitable deduction advances important policy objectives. The charitable deduction protects our freedom to create, fund and operate the institutions that weave the fabric of our civil society. Ohioans exemplify the strong American charitable tradition, giving over $6 billion to the causes closest to their hearts, directing dollars to thousands of Ohio organizations, including all manner of religious, educational, social service and cultural institutions.
We hope that Ohio’s members of Congress will stand together to support the charitable deduction. Call Senators Brown and Portman and your representative and ask them to keep the charitable deduction.