Kicking the Charitable Contribution Deduction Can Is Undemocratic

 

Since it was first enacted in 1917, the charitable contribution deduction has been amended 11 times, according to a 2020 CRS Report.  There is now pending before Congress a very likely nominee for the 12th change in the deduction's history.  Two of the last four amendments, dating back to 1981, have concerned whether the deduction should be allowed above the line.  The above the line deductions have been miniscule in the grand scheme of things and, it is fair to admit, facilitated cheating precisely because the permitted deductions were so small that they were not worth policing.  Taxpayers could easily enough claim the deduction above the line with confidence that nobody would question the claim.  But the reason why we should tolerate the moral hazard is that above the line deductions are the democratic thing to do.  It spreads the charitable contribution deduction subsidy to non-itemizers, presumably comprising middle and lower income earners.  It allows those earners to have a vote -- miniscule though it may be -- in the selection and operation of charitable missions.  They can vote with their subsidized dollars, the same as the far fewer but much wealthier donors.  

That's why this 12th proposal, though it enjoys bipartisan support, is only kicking the can.  This above the line deduction, too, is only for 2023 and 2024.  Congress should stop kicking and make the above the line deduction permanent.  

From Wednesday's press release:

Senators James Lankford (R-OK), Chris Coons (D-DE), Catherine Cortez Masto (D-NV), Marco Rubio (R-FL), Maggie Hassan (D-NH), Raphael Warnock (R-GA), Susan Collins (R-ME), Amy Klobuchar (D-MN), Gary Peters (D-MI), Tim Scott (R-SC), and Jeanne Shaheen (D-NH) today introduced the Charitable Act to expand and extend the expired non-itemized deduction for charitable giving that would ensure Americans who donate to charities, houses of worship, religious organizations, and other nonprofits of their choice are able to deduct that donation from their federal taxes at a higher level than the previous $300 deduction.  

Specifically, the bill would make available to taxpayers, who do not itemize on their tax return, a below-the-line deduction for charitable giving on federal income taxes valued at up to one-third of the standard deduction (around $4,500 for an individual filer and around $9,000 for married joint filers). The standard deductions for tax year 2023 are $13,850 for individual filers and those married filing separately and $27,700 for married joint filers.

You can read the full bill below the fold.

 

Press Conference Announcing Introduction of the Charitable Act of 2023

 

darryll jones