Tax breaks for charitable giving are in play on Capitol Hill.
Republicans in the House of Representatives want to make permanent three temporary tax breaks for charitable donations and to simplify the foundation excise tax, and this week President Barack Obama submitted his seventh budget proposal to Congress, in which he proposed a cap on the charitable tax deduction.
The Chronicle of Philanthropy reported that the charitable tax benefits House Republicans want to make permanent are among some 50 tax provisions, or “extenders,” that have usually been renewed each year:
- The IRA charitable rollover
- The enhanced deduction for donating land conservation easements
- The enhanced deduction for donating food inventory
Last summer, the House passed a bill that would have hived off the three charity extenders from the other tax breaks and made them permanent. The White House immediately responded with a veto threat, and election year politics ensured the bill would not survive.
Before the previous Congress adjourned, according to The Chronicle, it extended the three charity provisions retroactively for the tax year ended Dec. 31.
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Another provision in the legislation passed by the House last summer would have allowed private foundations to reduce the excise tax on net investment income from the current 2% to 1% in any year in which they exceed their average historical level of charitable donation.
The Chronicle reported that Republican Majority Leader Kevin McCarthy recently laid out a plan for another vote to simplify the foundation excise tax.
McCarthy’s proposal would impose a 1% levy on all foundations’ investment gain rather than two rates of 1% and 2% determined by the grant maker’s distributions to charity.
Obama’s budget proposal set the tax at 1.35%, The Chronicle reported.
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