A bi-partisan bill that would make charitable donations deductible by all who file federal taxes is being praised by Orthodox groups and the non-profit community at large.
The proposal, put forward by Representative Chris Smith (R-N.J.) and co-sponsored by Representative Henry Cuellar (D-Tex.), is intended to address a subject left unresolved by Congress’ far-reaching overhaul of the nation’s tax code. A popular provision of the federal tax reform significantly increases the standard deduction, thereby discouraging many from itemizing their returns, which precludes claiming one’s charitable deductions. Many non-profit organizations have feared that the change will significantly reduce people’s charitable donations, something the present bill seeks to forefend, by making such donations a deduction that can be used even by those taxpayers who choose to take advantage of the standard deduction.
“Charitable organizations, including churches, synagogues, and other religiously-based entities, are the life-blood of services to those in need in our society, and I am committed to a tax policy that amplifies their ability to serve our community,” said Rep. Smith.
Rabbi Abba Cohen, Vice President for Federal Affairs of Agudath Israel of America told Hamodia that the bill would be a boon for mosdos.
“We give tzedakah to support the institutions that we care deeply about, but having a tax benefit certainly makes it easier for people to give more,” he said. “I am pretty confident that every executive director of every mosad and the head of any non-profit is supportive of this bill. It would definitely be very beneficial to the Jewish community should it become law.”
Nathan Diament, Executive Director for Public Policy for the Union of Orthodox Jewish Congregations of America also warmly endorsed the proposal.
“Nonprofit groups, including the Orthodox Union, depend on taxpayer support to carry out our work,” he said. “This legislation will encourage people to make much-needed contributions that will strengthen charitable organizations across the country.”
Tax filers have long been given the option of taking what is referred to as the “standard deduction,” a flat amount subtracted from one’s income before taxes are calibrated. Others choose to “itemize” their filings, allowing them to deduct specific expenses from their incomes, such as certain forms of childcare and donations to qualifying charities.
The Tax Cuts and Jobs Act, enacted at the end of 2017, doubled the standard deduction, which for couples went from $12,000 to $24,000, making it a far more attractive option for filers, thereby significantly reducing the number of people who will be able to take advantage of deducting charitable gifts.
As Congress had announced its goal of simplifying the tax code, there was fear in the non-profit community that the charitable giving deduction would be done away with totally. While that never came to be, news of the increased standard deduction raised alarm among charities and religious groups, which scrambled to come up with a legislative solution to keep the itemized deduction a profitable option for more people.
A study carried out by Independent Sector, an umbrella lobby group of non-profits, illustrated the significant effect that the tax change would have on charities nationwide.
While the tax overhaul was being debated, Senator Frank Lankford (R-Okla.) proposed an amendment, supported by non-profits, that would allow those using the standard deduction to write off charitable gifts, but capped at $8,000 the amount that could be deducted. The amendment was never voted on during the tax debate, but remains an active bill in Congress.
Now, Rep. Smith has introduced an even more ambitious plan, which will make charitable contributions an “above the line” deduction, meaning that it could be used by all filers without setting any limit on the dollar amount of donations that can be deducted.
The bill has been endorsed by a wide range of non-profit groups, including the New Jersey Catholic Conference, United Way Worldwide, the Animal Welfare Institute, the Council on Foundations, the National Association of Charitable Gift Planners, the Faith & Giving Coalition, the American Littoral Society, the New Jersey YMCA State Alliance, the Alliance for Charitable Reform, Independent Sector, and the Humane Society Legislative Fund.
“This bill helps us live up to the idea that charitable giving is ingrained in our national identity,” said Daniel J. Cardinali, president and CEO of Independent Sector. “Expanding the charitable deduction to all taxpayers will ensure that more people actively participate in building better futures for themselves, their neighbors, and their communities.”
Rabbi Cohen was hopeful that the bill or some form of it would win Congressional support.
“Particularly at a time when independent non-profits are being asked to step up and do more to address the needs of the nation more and more, I don’t think that there is anybody in Congress who wants to hurt charities, and we hope that this will help avoid an unintended consequence of the recent tax reform.”