- The Washington Times - Sunday, October 15, 2017

Republicans are looking for ways to prop up donations amid complaints from charities that the GOP’s tax reform could hurt their bottom lines.

Rep. Mark Walker, an influential House conservative, has come up with a plan to add a $4,000 tax deduction for charitable giving beyond what’s already in the code and to give a boost to low- and middle-income families by letting them take the standard deduction and also deduct for charitable giving.

“Giving to charity is crucial for economic prosperity, happiness, and the success of our people,” said Mr. Walker, North Carolina Republican and chairman of the conservative Republican Study Committee. “But for too long, only the most wealthy have been incentivized to give to the causes they believe in.”

Mr. Walker’s has introduced a bill that will allow people to take both the standard deduction when they file and an additional deduction — up to about $2,100 for individuals and $4,200 for married couples — for charitable giving.

Currently, only people who forgo the standard deduction and itemize their taxes — usually those on the upper scale of income — can also write off contributions to charity.

Charity groups, who have been wary about the effects of Republicans’ proposed increase in the standard deduction on their organizations, quickly applauded the effort.

“Congressman Walker’s bill expands good tax policy, providing an incentive to more Americans to invest in their communities through charitable giving,” said Jason Lee, chair of the Charitable Giving Coalition.

“A non-itemizer deduction will become even more critical within the larger tax reform framework currently under consideration,” he said.

But it’s unclear whether Mr. Walker’s suggestion will help or hurt the current push for a massive overhaul of the tax code.

GOP leaders’ framework calls for doubling the standard deduction, to $12,000 for individuals and $24,000 for couples.

They say expanding the standard deduction will increase the number of “zero bracket” filers who face no federal income tax liability. Still, they have also pledged to protect popular deductions for charitable giving and mortgage interest, which are limited to those who itemize their taxes.

But charity and housing groups have argued that even with their carve-outs preserved, the GOP’s plan will push more people to claim the standard deduction, reducing the tax incentive to donate to charities.

“Any shift in policy, I think, that discourages charitable giving — it could put a lot of nonprofits out of business,” said J. Keith Henry, chief operating officer for Baptist Children’s Homes of North Carolina.

Some also argue, however, that the charitable contribution deduction in particular is already prone to abuse as wealthier individuals get creative with classifying their “donations” — for example, when taxpayers get a break for offering up a land easement to be protected for conservation purposes.

Allowing more people to claim the deduction is also likely to increase the price tag of the GOP’s tax package even more. Republican lawmakers have already junked a trillion-dollar border tax, and are divided over whether to eliminate the deduction for state and local taxes paid, which could generate some $2 trillion over 10 years.

The Tax Foundation recently estimated that making the charitable giving deduction “above the line,” or available to all taxpayers, would reduce federal revenues by $191 billion over 10 years when compared to current law.

That cost swelled to $515 billion in the context of the House GOP’s tax framework, which had included similar proposed increases in the standard deduction as Republicans’ most recent outline.

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