Opening Statement at Hearing on Charitable Deduction

Opening Statement of Ranking Member Sander Levin
Hearing on Charitable Deduction
(Remarks as Delivered)

We are holding this hearing on an important, but not very immediate topic. What is not being done is to address the sequester that looms immediately. There are five legislative days remaining before the sequester kicks in and does severe damage to our economy. Just last week the nonpartisan Congressional Budget Office warned about the prospects of inaction, noting that it would slash GDP growth by 30% this year. This Committee should be focused on reviewing the economic consequences of inaction and finding a bipartisan solution.

Again, that is not to say that the topic for today’s hearing is unimportant. Quite the contrary.

In their last two budgets House Republicans have proposed cutting the top marginal rate to 25 percent, creating a $5 trillion revenue loss. Some of the proponents have suggested one major way to fill that hole is by cutting loopholes and acting on the largest deductions and credits, which includes the charitable deduction. 

Such action needs to be looked at, carefully, as I have long suggested.

The charitable deduction is among the 10 largest tax expenditures in the code, benefitting almost 1.1 million charities and more than 37 million Americans who contribute to Section 501(c)(3) organizations every year. 

In 2010, it is estimated that individuals donated $210 billion to charitable organizations, of which they claimed $170 billion on their tax returns. 

As we know, there are already deduction limitations in place for the very wealthiest Americans – through the so-called Pease provision that was reinstated during the action that Congress took on New Year’s Day to avoid the fiscal cliff. I would be interested in knowing from our witnesses today how further limitation would affect their organizations. 

Yesterday, in announcing the working groups that we have set up, I said that the process helps us undertake in-depth fact-finding on a variety of important issues related to tax reform, including the charitable deduction. The testimony we hear today may help us kick off that effort.