Policy Update
Sign-on Letter Endorsing a Charitable Deduction for Non-itemizing Taxpayers
4/26/2005
Sign-on Letter Endorsing a Charitable Deduction for Non-itemizing Taxpayers
United Way of America is circulating a letter to national, state, and local nonprofit organizations asking Congress to reinstate the charitable deduction for taxpayers who do not itemize their tax returns. This proposal is similar to a deduction that was available to non-itemizing taxpayers from 1982-1986.
In the last session of Congress, both the House and Senate passed legislation by wide margins that would have reinstated the deduction for non-itemizers. Unfortunately, the bills were stalled by unrelated partisan differences in the Senate over Democratic participation in House-Senate conferences negotiations.
This year the proposal has been included in legislation (S. 6) introduced by Sen. Rick Santorum (R-PA). Sen. Joe Lieberman (D-CT) was a cosponsor of an identical bill in the last session of Congress that passed the Senate by a vote of 95-5. He is expected to sign on again as a cosponsor when the Senate takes up the legislation this year. An analysis of this legislation, called the CARE Act, can be found here:
http://national.unitedway.org/publicpolicy/docs/UWA_Analysis_of_the_CARE_Act.pdf
Under this proposal, single tax filers who use the standard deduction could deduct contributions over $250 up to a ceiling of $500. Joint filers who use the standard deduction would be allowed to deduct contributions over $500 up to a ceiling of $1000. To maximize new giving, the deduction applies only to that portion of annual contributions that exceeds the specified floor ($250 for single filers, $500 for joint filers).
While the non-itemizer deduction has already been included in the Senate CARE Act, its fate in the House is unclear. While President Bush has included it in previous budgets submitted to Congress, he did not include it in his most recent budget request for federal fiscal year 2006. As The Chronicle of Philanthropy noted in a March 17, 2005 story, the president chose not to request the deduction this year in part because of a lack of demonstrated support from the nonprofit community.
We are working to correct that impression.
There is no deadline for this letter. We are keeping it open until Congress acts. If we can continue to pull in just a dozen or so new sign-ons a day, that will add up to significant numbers over the next few weeks and months.
The text of the letter follows below. To sign on your organization, please contact me, Jenn Novesky at jenn.novesky@uwa.unitedway.org. Please include the name of your organization as it should be listed, whether yours is a national, state, or local organization, your city and state, and an appropriate contact person at your organization. Also, we ask that you pass this email along to your state/local affiliates.
Best,
Jenn Novesky, Senior Associate for Public Policy, United Way of America
Sample letter:
[date]
Dear Representative (Senator)
We are writing to urge you to support the reinstatement of a deduction for charitable contributions by taxpayers who do not itemize deductions on their tax returns. This proposal is similar to a deduction that was available to non-itemizing taxpayers from 1982-1986.
As you may know, this deduction was included in legislation passed overwhelmingly on the House and Senate floors during the 108th Congress (S. 476 and H.R. 7). While President Bush did not include the provision in his most recent budget request to Congress for federal fiscal year 2006, he has done so in previous budgets submitted to Congress. The provision has also been included in legislation (S. 6) introduced in this Congress.
More than two-thirds of Americans do not itemize. Each year, this group of Americans contributes an estimated $36 billion to charities. On March 8, 2005, United Way of America released an analysis that concluded that reinstating the non-itemizer deduction, as proposed in the Senate CARE Act, would generate billions of dollars in increased giving to charities each year.
Research also shows that lower and moderate-income individuals are more likely to be non-itemizers, and that they give a greater percentage of their incomes to charity than higher income individuals. They are thus more likely to receive the benefits of this deduction.
The undersigned organizations support policies that promote charitable giving and strengthen America’s communities. We believe that reinstating a charitable deduction for taxpayers who do not itemize deductions on their tax returns would be an important step toward these worthwhile goals.
Respectfully yours,