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Tax Write-Offs For Charity Donations To Be Axed?

By Huffington Post
November 18, 2010

As the federal government looks to address the country’s looming $1.3 trillion budget deficit, lawmakers are looking at drastic budget cuts and other creative ways to reduce America’s debt.

A surprising policy that may be on the chopping block? Tax deductions for charity donations.

In their proposal released last week, Obama’s bipartisan budget committee suggested several ideas for reducing charity tax breaks.

Co-authors Democrat Erskine Bowles and Republican Alan Simpson suggested three ways this could work. One possibility is raising the bar for what donation amounts can be written off.


The Chronicle of Philanthropy
reports:

They said one option was to set a floor of 2 percent of adjusted gross income. In other words, taxpayers could not get deductions for any dollars spent on charity below that level.

Another recent deficit reduction plan, this one proposed by the Bipartisan Policy Center, took it one step further.

In their “Restoring America’s Future” proposal released this week, the Debt Reduction Task Force spearheaded by Dr. Alice Rivlin and Senator Pete V. Domenici made budget suggestions that included axing the current charity tax break system.

Instead, they proposed a system of tax credits given by the federal government to charities.

The Chronicle of Philanthropy reports,

In its place, all donations made by federal taxpayers would qualify for a 15-percent tax credit. But instead of that credit going to the taxpayer, it would be given to the charity receiving the donation in the form of a matching grant from the Internal Revenue Service.

From The Huffington Post

3 Responses to Tax Write-Offs For Charity Donations To Be Axed?

  1. Guardhouse Lawyer

    November 19, 2010 at 2:58 pm

    In the final analysis the subsidizing of charities by having the US Government end up paying a portion is probably a violation of the separation clause of the Constitution., since dollars that would otherwise have been in the Treasury are in the hands of charities, including religious institutions.

    To the best of my knowledge there has never been a challenge to the legality of the deductions but common sense tells me it’s a problem.

    • Almandine

      November 19, 2010 at 4:12 pm

      Common sense… yeah, reminds one of the Fed creating and valuing US money in abrogation of Article 1, section 8.

      What was it W. said… Just a piece of paper?

  2. griff

    November 19, 2010 at 4:24 pm

    Why stop at axing the charity tax break system? Axe the whole tax system.