Both Hillary Clinton and Donald Trump’s tax plans would significantly decrease charitable giving, according to a new think tank analysis Friday.
The Tax Policy Center estimated that, if enacted, the Republican’s tax plan would reduce total charitable giving by $13.5 billion and $26.1 billion in 2017, a cut of up to 9 percent. Clinton’s proposals, meanwhile, would cut giving by $6 billion to $11.7 billion, a 4 percent at the high end.
Charity would get hit in either scenario even though the two have drastically different tax proposals. Trump has called for slashing tax rates and reducing revenues, while Clinton has proposed to raise revenues by raising rates and eliminating tax break for high earners.
The analysis released Friday highlights the reasons that nonprofit groups, including philanthropies, museums, and universities, are rallying and lobbying to preserve and expand existing tax breaks for charitable contributions.
Trump’s reform would lessen the incentives for giving to charity in a few different ways. By jacking up the standard deduction, Trump would sharply reduce the number of people who “itemize” deductions, including for donations they have made, and that could be a disincentive to giving. Of the 45 million people who itemize today, and therefore have an incentive to give money away, 27 million would be better off taking the standard deduction under Trump’s plan, the Tax Policy Center found.
Also, Trump would cap itemized deductions at $200,000 for couples. That would reduce the incentives for giving for many high earners who already deduct at least that much.
On the other hand, high earners would have a lot more money to give away with Trump’s tax cuts in hand.
Clinton, conversely, would raise taxes on the wealthy, leaving them less to give away. Also, by applying the “Buffett Rule” to incomes over $1 million, Clinton would make it so they didn’t save on taxes by giving money away, reducing the incentives to do so.
