Charities could gain and lose from different elements of proposals by President Bush to rewrite U.S. tax policy.
A new study says Bush’s plan to extend the deduction for charitable contributions to taxpayers who do not itemize could generate $14.6 billion a year more in donations to charity, up 11 percent from current levels, The New York Times reported Jan. 31.
But other studies suggest that Bush’s plan to abolish the estate tax could reduce bequests and other forms of charitable giving by 12 percent to 31 percent, The Kentucky Post reported Jan. 31.
The Bush plan to expand deductions, part of his effort to boost religious and other charities, would let more than 80 million taxpayers who don’t itemize deduct their charitable contributions, up to a ceiling equal to the standard deduction of $4,550 for a single filer in the 2001 tax year and $7,600 for a married couple filing jointly, the Times said.
“Of all the proposals the president has put forward, this one will have the greatest impact on stimulating new giving and supporting the work of religious, human service and other nonprofit organizations that play such an important role in our communities and in the world,” Sara E. Melendez, president of Independent Sector, told the Times.
Independent Sector, a coalition of nonprofits and corporate giving programs, commissioned a study by PricewaterhouseCoopers of the impact of the proposal.
Republican U.S. Rep. Jennifer Dunn of Washington State on Jan. 31 to introduced a bill to phase out the so-called “death tax” over the next 10 years.
Congress approved a similar measure last year but President Clinton vetoed it. Supporters expect the measure will become law with Clinton gone and Bush in the White House, the Post said.
Studies suggesting the proposal would result in fewer donations are based on the belief that the estate tax gives wealth people an incentive to donate to charities – and that removing a big tax burden would make them less likely to give, the Post said.
But others say donations actually could grow because people would have more money to give if they don’t have to pay a big estate tax.
Patrick M. Rooney, chief operating officer and director of research at the Center on Philanthropy at Indiana University, told the Post that more research is needed to help resolve contradictory data before the government takes action.