Ways & Means Hearing on Tax Reform and Charitable Contributions

The Ways & Means Committee will hold a hearing to examine the itemized deduction for charitable contributions as part of the Committee’s work on comprehensive tax reform.  The hearing will take place on Thursday, February 14, 2013, in Room 1100 of the Longworth House Office Building, beginning at 9:30 A.M.

BACKGROUND:

Section 170 of the Internal Revenue Code provides a deduction to the roughly one-third of taxpayers who itemize their deductions for charitable contributions.  Taxpayers may contribute on a deductible basis to institutions such as churches, universities, hospitals, museums, and certain other tax-exempt organizations.  Certain limits apply to the deduction, such as percentage-of-income limits and purposes for which contributions may be made, and the recently reinstated overall limitation on itemized deductions for taxpayers above certain income thresholds.

Proposals to limit the deduction for charitable contributions have appeared in recent years, in some cases as part of broader tax reform proposals that lower rates and in other cases for the purpose of raising taxes to fund specified levels of government spending.  Examples of some of these restrictions include: limiting the tax rate against which contributions may be deducted; a dollar cap on total itemized deductions; a floor below which contributions may not be deducted; and the replacement of the deduction with a tax credit available regardless of whether the taxpayer itemizes.  Different types of limitations could have varying effects on giving. 

As part of the Committee’s ongoing commitment to pursue comprehensive tax reform in an open and transparent manner, the Committee is holding this hearing to allow stakeholders and members of the public the opportunity to share their perspectives on the deduction and on various proposals to modify it.

In announcing this hearing, Chairman Camp said, “Public charities and private foundations perform invaluable services for our society, especially during this time of economic slowdown and high unemployment.  These organizations depend upon the goodwill of the American people – the most giving and charitable people in the world.  Because of the critical role that charities play, the Committee must hear directly from the charitable community before considering any proposals as part of comprehensive tax reform that might impact their ability to obtain the resources they need to fulfill their missions.”

FOCUS OF THE HEARING:

The hearing will examine the itemized deduction for charitable contributions as part of the Committee’s work on comprehensive tax reform.  It also will receive testimony from witnesses on previous proposals to modify the deduction and its value.