Tax Reform Update: Senate Bill Introduced and Possible Universal Charitable Deduction Amendment
On Thursday, the Senate Finance Committee released its version of a tax reform bill, which reflects many of the same provisions and the House version of the bill, which is known by the same name: The Tax Cuts and Jobs Act. The two bills are similar on issues like preserving the charitable deduction, the amount of the standard deduction and share of taxpayer income eligible for charitable deductions, and nonprofit executive compensation.
Notable differences affecting charities in the Senate bill include no private foundations excise tax, no reporting requirement, and no repeal of the Johnson Amendment. The Senate bill also keeps the estate tax levy in place, but doubles the size of the estate, while the House version would eliminate the tax entirely after 2024.
Universal Deduction Amendments
Now that both bills have been released, the top focus of the nonprofit sector is the addition of a universal deduction amendment. Both bills call for simplifying the federal tax structure by doubling the standard deduction and reducing the number of itemizers. However, removing the tax incentive for taxpayers to itemize their deductions has the unintended consequence of resulting in an estimated $13 billion reduction in charitable giving, which was confirmed in a memo last week from the Joint Committee on Taxation.
Two proposed amendments, one from Sens. Debbie Stabenow (D-MI) and Ron Wyden (D-OR), and one from Sens. John Thune (R-SD) and Pat Roberts (R-KS), could potentially alleviate the potential loss in charitable donations. Both bills support the idea of a “universal deduction,” which would enable non-itemizers to deduct charitable donations. The Alliance of Charitable Reform, of which NCDC is a partner, has a thorough summary of both proposed amendments.
More on tax reform:
- Senate’s Tax Bill Provisions Could Hurt Charities, Nonprofits Say [Chronicle of Philanthropy]
- GOP unveils tax reform bill draft. College endowments are on the table. [Philanthropy Daily]
More need to know news:
- USPS Mail Prices Approved for January 21, 2018 [Alliance of Nonprofit Mailers]
“Nonprofit managers have spent the last 20 years hearing about the “Great American Wealth Transfer,” which was predicted to usher in a Golden Age of Philanthropy with trillions upon trillions of dollars expected to flow to the U.S. philanthropic world.
“Unfortunately, for a number of reasons, this charitable windfall hasn’t yet materialized.” [The Sharpe Group]
More emerging trends:
- Will Jeff Bezos set a new precedent for philanthropy? [Philanthropy Daily]
- 'Experienced' Donors Expect to Give More in 2017, Survey Finds [Philanthropy News Digest]
TIPS & TACTICS
“Most than just a digital assistant, Amazon Alexa is evolving into software that empowers and proliferates the Internet of Things… The era of nonprofits embracing the Internet of Things has begun.” [NP Tech for Good]
More tips and tactics:
- The Path to a Very Large Gift from One Donor [Veritus Group]
- Consultant Corner: Grief and the Gift Planner [Sharpe Group]
- 10 Steps to Finding New Donors for Your Nonprofit Organization [Nonprofit Pro]
- Activate your Community for #GivingTuesday [Network for Good]
- Proposed tax bill has 'unconscionable' flaws, US bishops say [Catholic News Agency]
- U.S. Bishops: “unconscionable” tax bill raises taxes on the poor to pay for cuts for the wealthy [America]
Inspirational insight of the week:
"We must pray without tiring, for the salvation of mankind does not depend on material success; nor on sciences that cloud the intellect. Neither does it depend on arms and human industries, but on Jesus alone."
- Saint Frances Xavier Cabrini