Charitable organizations, including churches, synagogues, and other religious entities, as well as nonprofits, are the life-blood of services to those in need in our society.
For families who have lost everything in a natural disaster — as happened in my home district when Hurricane Sandy ravaged the Northeast in 2012 — churches, synagogues, and charities provide them with critical supplies, shelter, and counseling.
Every day, nonprofits shelter the homeless, provide meals for the elderly, help the unemployed find work, run after-school programs for children, rescue animals off the streets, and provide a myriad of other critical services for our communities. They are the pillars of our communities.
Yet, these nonprofits may be left out in the cold under the new tax policy, as many small donors whose generosity is essential to the doors of these charitable organizations remaining open may have to choose between making a tax-deductible donation to a charity and keeping their hard-earned money for bills and savings by taking the standard deduction.
Under the new tax policy, the standard deduction increases and some itemized deductions are eliminated; as a result, more taxpayers are expected to choose the standard deduction, but will thus be unable to write off charitable donations on their taxes.
The percentage of taxpayers taking the standard deduction is estimated to jump from 70 percent to 95 percent. The Tax Policy Center estimated that, for 2018, 21 million fewer taxpayers would be permitted to take the charitable deduction on their taxes. The number of middle-income taxpayers using the charitable deduction could fall by two-thirds.
This change could put a huge burden on charities, which depend on both large and small donors.
Many middle-income taxpayers, absent the incentive of a tax deduction, simply may not have the resources on hand to give to their charity of choice. Thus, I recently introduced, with the cosponsorship of Rep. Henry Cuellar, D-Texas, the bipartisan Charitable Giving Tax Deduction Act (HR 5771) to protect taxpayers and encourage charitable giving.
HR 5771 would restore the option for all taxpayers to write off charitable donations on their taxes whether or not they choose to itemize, making charitable tax deductions universal and “above-the-line.” It would apply to taxes retroactive to the beginning of the 2018 tax year.
Taxpayers, as soon as the bill is enacted, could get maximum relief by taking the standard deduction they need while still being able to afford charitable donations.
In addition, the amount of charitable contributions would not be capped under my legislation; it would only be limited by the current charitable donation limits of 60 percent of one’s adjusted gross income.
The bill is supported by many charitable and faith-based organizations and philanthropic networks, including Agudath Israel of America, the Union of United Orthodox Jewish Congregations of America, the New Jersey Catholic Conference, United Way Worldwide, the Animal Welfare Institute, the Council on Foundations, the National Association of Charitable Gift Planners, the Faith & Giving Coalition, the American Littoral Society, the Alliance for Charitable Reform, Independent Sector, the American Alliance of Museums, the Association of Art Museum Directors, the Council for Advancement and Support of Education, Count Basie Center of the Arts, Orthodox Union, and the Humane Society Legislative Fund.
These charitable organizations know that it is essential for small donors to have the resources available to give to charity. Americans have long been generous patrons of charitable causes, and we want to ensure that everyone, especially low-and-middle-income earners, has the support they need to continue their generosity.
Rep. Chris Smith, R-N.J. represents New Jersey’s 4th Congressional District. You can follow him on Twitter: @RepChrisSmith
