Wednesday, August 25, 2010

The Government’s Vanishing Charitable Deduction?

Several states are considering capping charitable deductions—New York is the latest. The Administration proposed capping charitable deductions (and other itemized deductions) to fund health care proposals and has stated an intention to include such a proposal in the 2011 budget.

A bipartisan proposal introduced by Senators Wyden (D-OR) and Gregg (R-NH) bears watching. Under their tax reform bill (S. 3018), standard deductions would soar: $30,000 for those married filing jointly, $15,000 for singles and $22,500 for heads of households. Such a change would effectively eliminate the charitable deduction (and other itemized deductions) for most taxpayers other than high-income individuals.

And, the chorus of those opposed to the charitable deductions is also rising. Just one example is found in Edward Kleinbard’s blog.

What does the future hold for the charitable deduction? While it is unclear, it appears there will be increasing pressure to reduce the value of the deduction or eliminate it all together.

Churches and other Christ-centered nonprofits have always relied on committed givers. The commitment level may be raised in the future—giving without respect to a tax deduction.

In searching the Scriptures, I find no requirement to obtain a tax deduction before we give. No, giving is a spiritual issue of the heart. It is an act of obedient worship.