As this year winds down, many Americans focus on year-end giving. There is abundant evidence that charitable giving has been affected by our newly revised tax code that rewards fewer taxpayers with tax benefits. Howard Husock wrote about this earlier this month when many Americans took advantage of “Giving Tuesday.” His observations then are even more relevant at the end of December.
Indiana University’s school of philanthropy had been able to document two significant trends. While overall giving has slightly climbed, individual giving has declined. Actually, when you adjust for inflation, then giving by individuals declined even more.
The major reason is the 2017 Tax Cuts and Jobs Act, which raised the standard deduction for federal income-tax returns for a larger percentage of taxpayers. In the past, many of these taxpayers would itemize their charitable deductions. Now they no longer qualify for a charitable tax deduction.
The Tax Policy Center acknowledges that “most low- and moderate-income taxpayers do not claim a deduction for charitable contributions, largely because most do not itemize.” The 90 percent of households that do not itemize make at least 40 percent of all charitable contributions. The remaining 10 percent that do itemize account for 60 percent of charitable contributions.
I suspect that a significant percentage of those who don’t itemize but do make charitable contributions are Christians who do so because they believe they should give to their church and Christian organizations. Some are suggesting a future tax code revision provides for a charitable-giving tax credit or some other incentive.
Of course, these proposals won’t even be considered if we continue to elect to Congress representatives that try to find more and more ways to spend and continue to run up massive federal deficits.