Why Do You Give to Charity?
If you're answer is: "For the tax breaks, of course!" you might be offered less of an incentive in the near future.
The idea of reforming and possibly reducing charitable tax deductions is just one of many potential amendments to the tax code that has been floated since the fiscal crisis worsened.
But it's a political flop. In a rare show of unanimity, both Republicans and Democrats hate the idea.
Still, President Obama continues to support it; he's included it in two budgets as well as in his recent jobs bill. According to Senior Editor Suzanne Perry at the Chronicle of Philanthropy, the possibility of charitable deduction reform doesn't seem to be going away.
I think that even though it hasn't passed, yet, what some charities are worried about is that it will stay on the table as long as we're having economic difficulties. And what they're really worried about right now is the Supercommittee.
The Joint Select Committee on Deficit Reduction (aka Supercommittee) is a bipartisan group tasked with finding as many nips and tucks in government spending as it can without permanently disfiguring the patient.
In more flush times, the charitable tax deduction is considered sacrosanct, explains Perry, because it rewards generosity.
You're saving on money that you've given to someone else. Whereas with the mortgage deduction you're saving on money that you spent on yourself.
It's unclear what kind of impact a reduction would have, but three recent reports speculate it could be anywhere from $1 billion to $3.2 billion dollars.