Source: The Hill
October 10, 2017
The leader of the biggest group of House conservatives is quietly pushing to expand the number of people who can claim a tax break for charitable giving in the GOP tax-reform legislation, expected to be released within weeks.
Rep. Mark Walker (R-N.C.), the chairman of the Republican Study Committee, introduced a bill late last week without fanfare to create a new deduction for charitable contributions for those who don’t itemize. His office predicts it will likely be merged within the tax bill that Republicans are counting on to deliver their first big legislative victory this year.
"We believe that this is a great piece of legislation because it specifically targets who we need to target with the low and middle income taxpayers,” Walker told The Hill on Tuesday.
The bill is a personal initiative of Walker’s, not the RSC, but the congressman’s role in leading the conservative caucus gives him a platform to promote the issue.
House Ways and Means Committee Chairman Kevin Brady (R-Texas) has said he is open to similar ideas in the past.
Walker said that he's talked to a few lawmakers on and off the Ways and Means Committee about the bill and has heard that his idea makes sense and would help push back on the narrative that the GOP's tax efforts will only benefit the rich.
He said his bill “may have a good chance of being included" in a broader tax-reform package.
David Thompson, vice president of public policy at the National Council of Nonprofits, called the effort “a very happy surprise.”
Those who itemize tend to be wealthier, so creating a so-called universal deduction could help to encourage charitable giving from low- and middle-income Americans as well, according to Walker’s office.
That could help insulate Republicans from criticism that their tax blueprint favors the wealthy.
Under current law, individuals can only deduct their charitable donations if they itemize their deductions rather than take the standard deduction.
The tax framework the White House and congressional GOP leaders released last month “retains tax incentives” for charitable contributions and mortgage interest but nearly doubles the standard deduction, significantly reducing the number of people who would itemize.
Nonprofits fear that the tax framework would still have the effect of curbing incentives for charitable giving.
Walker’s bill would allow taxpayers who take the standard deduction to also deduct their charitable contributions up to an amount equal to one-third of the standard deduction. The standard deduction for married couples under current law is $12,700 and would be increased to $24,000 under the GOP’s framework.
The bill would also retain the current itemizable charitable deduction.
Representatives from the nonprofit sector said they’re encouraged by Walker’s bill.
For the last several months, groups representing charities and foundations have been meeting with lawmakers and Trump administration officials, including Vice President Pence. They’ve been making the case that there would be unintended consequences of increasing the standard deduction and pushing for a universal charitable deduction that taxpayers can take regardless of whether they itemize.
That lobbying appears to be paying off.
When the tax framework was unveiled in September, the nonprofit community “didn’t see any indication that we had been heard,” but Walker’s bill signals that lawmakers are listening to charities’ concerns, said Steve Taylor, senior vice president for public policy at
“We hope that this language, or something like it, gets incorporated into the House tax-reform legislation before it’s actually rolled out,” Taylor said.
The legislation would not only help taxpayers who would be likely to stop itemizing their deductions under the GOP tax framework, but it would also help taxpayers who currently claim the standard deduction and already donate to charity.
About 30 percent of taxpayers currently itemize, but only about 5 percent of taxpayers would be expected to itemize under the current GOP framework.
Advocates for the nonprofit sector said it’s unclear how a cap on the size of the universal charitable deduction would impact donations.
But Taylor said the bill “really goes a long way toward addressing our concerns.”