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Reading Between the Lines: Budgets, Taxes & Charitable Giving


Editor’s Note: Sandra Swirski and Sara Barba of the Washington, D.C., advocacy firm Urban Swirski & Associates offer regular analysis of public policy developments of interest to Southern grantmakers – reading between the lines so you don’t have to.

The timeline for tax reform has accelerated in the past couple weeks, and House lawmakers are now talking about passing a tax reform bill in their chamber before Thanksgiving. This week, we’ll dive into that timeline and how expanding the charitable sector could come up in the tax reform debate.

Tax Reform Timing

Today, the House passed the Senate budget resolution that paves the runway for tax reform with budget reconciliation instructions. This fast-track option saves about two legislative weeks of the very few lawmakers have left in 2017.

The expectation now is that House Republicans will release legislative text next Wednesday, November 1, to then be marked up by the Ways and Means Committee the week of November 6. After the legislation passes out of the Ways and Means Committee, House GOP leaders expect to hold a floor vote the week of November 13 before members leave for Thanksgiving break.

In the Senate, Finance Committee Chairman Orrin Hatch (R-UT) has indicated he plans to release his version of the bill to his committee in the coming weeks, but beyond that, the timing is less clear in the upper chamber.

Both the House and Senate bills are expected to include a doubling of the standard deduction for individuals and married couples – a proposal that could take the charitable deduction away from approximately 30 million people. That reduction could prove to be a disincentive for charitable giving as people no longer make the connection between giving and tax deductions.

So, what could derail the process? First, the timeline is ambitious. Lawmakers only have three legislative weeks left before the Thanksgiving recess, and thereafter only a few more weeks before Christmas.

Second, there is still dramatic disagreement among members in the party about what to include in the forthcoming bill. Republicans in blue states need assurance that the state and local tax deduction won’t be eliminated, and more conservative members will likely request some cuts with the deficit in mind. However, GOP lawmakers are in desperate need of a legislative win before the new year, and that just might trump intra-party disagreements.

Finally, unrelated outside influences, such as national disasters, security crises and personal disputes, to name a few, could always stall the process. That’s just the nature of the Capitol Hill beast.

Universal Charitable Giving Act

So what could be in that tax reform bill for the charitable sector? Possibly a charitable deduction for non-itemizers. Earlier this month, Representative Mark Walker (R-NC) introduced the Universal Charitable Giving Act (H.R. 3988), which would offer non-itemizers a deduction for their charitable contributions up to one-third of the standard deduction. Under current law, that’s a cap of about $2,000 for single filers and $4,000 for married couples. If tax reform includes a doubled standard deduction (which is expected by most), it would be a cap of about $4,000 for singles and $8,000 for married couples.

Rep. Walker is the only lawmaker on Capitol Hill that has put pen to paper to craft a charitable deduction for all taxpayers. It is not yet clear if the proposal will be included in the House's bill.

Sandra Swirski is a partner at Urban Swirski & Associates; Sara Barba is assistant vice president at the firm.

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