The Senate GOP tax reform bill was unveiled on 11/09/17. Here is what we know today.
Click here for the Associated Press’s initial announcement on 11/09.
Click here for the summary of the Senate’s bill.
Click here for a summary of the House bill.
Here are a few articles that offer various perspectives on the Senate plan and how it differs from the House Plan.
- Senate Tax Proposal by the Numbers (FinancialPlanning)
- Everything You Need to Know About the Senate GOP Tax Proposal (wealthmangement.com)
- Key Differences Between the Senate and House Tax Plans (The Hill)
What does this mean?
The Alliance for Charitable Reform has released very concise summaries of the House and Senate proposals and their impact on nonprofits. We believe it is IMPORTANT to read the section entitled “JCT Analysis.”
Here is an important excerpt from that section:
“The [Joint Tax Committee] memo confirmed two things. First, the number of those who will itemize will be greatly reduced, which was also a finding in a study released earlier this year by Indiana University’s (IU) Lilly School of Philanthropy; and second, charitable deductions will fall by $95 billion, or 40 percent, under the current House tax reform bill. To clarify, this does not mean that charitable giving will fall by $95 billion, only that the amount being claimed as a charitable deduction will fall. It confirms the ramifications for the charitable sector that comes with greatly reducing the number of those who will itemize.
In terms of actual charitable giving lost, the IU study found that as a stand-alone provision, increasing the standard deduction would reduce giving by $11 billion.”
How much is $11 billion? Remember that 1 billion is equal to 1,000 million. A reduction in giving of $11 billion amounts to 11,000 million dollars. To put that in perspective, it would mean the complete loss of funding for 11,000 hypothetical organizations raising $1 million dollars each. That is a tremendous loss when individual giving is just now returning to pre-recession levels in real terms. The time for organized lobbying has now largely passed. According to Sandra Swirski, Executive Director of Alliance for Charitable Reform, “It is IMPERATIVE at this point that legislators hear from their constituencies.”
In our opinion, we should be encouraging legislators to add an above the line “Universal Deduction.” This would go a long way toward reversing the current path of both bills that would result in taxing funds given to charity by the vast majority of donors.