Sens. Chris Coons, D-Delaware, and James Lankford, R-Oklahoma, sent a letter July 13 to Secretary of the Treasury Steven Mnuchin requesting information on the charitable deductions claimed in tax year 2018 and future projections for charitable giving to assess the impact of the Tax Cuts and Jobs Act.
The senators are concerned about the decreases in charitable giving in the U.S. after significant changes to the tax code.
“We are writing to follow up on your commitment to share information on the charitable deduction, which you made during your testimony before the Senate Appropriations Financial Services and General Government Subcommittee on May 22, 2018. We remain concerned and seek additional information on the potentially alarming decrease in charitable giving in the U.S. following significant changes to the tax code made by the Tax Cuts and Jobs Act,” the senators wrote.
“As you know, the Tax Cuts and Jobs Act nearly doubled the standard deduction for most filers, changing the incentive for many Americans to itemize and claim the charitable deduction. Removing this incentive could significantly reduce the amount of charitable giving in the U.S. According to estimates from the nonpartisan Joint Committee on Taxation, the Tax Cuts and Jobs Act will reduce charitable deductions by $95 billion in 2018. As a result, according to the nonpartisan Tax Policy Center, charitable giving is estimated to fall by approximately 5 percent. The American Enterprise Institute, another nonpartisan public policy think tank, released a similar report in which they estimate charitable giving will be reduced by almost 4 percent, or $17.2 billion based on a static model. According to AEI, the majority of this effect — 83 percent — is a result of the increase in the standard deduction,” the senators wrote.
“Charities in Oklahoma, Delaware and all across the country, including many faith-based organizations, rely on donations to provide countless services to Americans in need, including combating homelessness, providing health care to the medically underserved, and improving outcomes for disadvantaged youth. As co-chairs of both the National Prayer Breakfast and the Senate Prayer Breakfast, we believe that even in times of tight budgets, we have a moral obligation to support our neighbors most in need, and charities play an essential role in doing just that. Despite our disagreements on other tax-related issues, we believe that our tax code should support American charities and the generosity of millions of Americans who donate to charities,” the senators wrote.
“Charitable giving is also essential to maintaining and growing the charitable industry, which is an important part of our nation’s economy. According to a report from Independent Sector, a national membership organization that includes nonprofits, foundations and corporations, charities within the nonprofit sector make up the third largest sector of the American workforce, accounting for 10 percent of jobs. A decrease in charitable giving may have significant consequences for the charitable industry’s capabilities and the 11.4 million people it employs,” the senators wrote.
“Because of these concerns, we request that the Administration provide any data that is currently available on charitable deductions claimed in tax year 2018 and projections for charitable giving in tax year 2018. Going forward, we request quarterly data on the number of charitable deductions claimed and the average size donations given, and when available, a comparison of this data for tax year 2018 to the previous ten years. If those projections are lower than previous years, or any concerning trends related to charitable giving are identified, we look forward to working together to address these issues immediately,” the senators wrote.