A new report suggested President Trump may seek to cap charitable deductions in a tax reform package. President Obama’s efforts to do the same may serve as a cautionary tale.
A new report from The Hill‘s Alexander Bolton suggested President Trump may seek to cap tax deductions Americans can take for charitable giving. However, President Obama had a difficult time doing the same during his tenure.
Bolton reported on Wednesday that Trump and Treasury Secretary Steven Mnuchin have not ruled out capping charitable deductions, as it helps fulfill a Mnuchin promise that “there [will] be no absolute tax cut for the upper class.”
Bolton also noted that President Obama tried to do the same, limiting the deductions to 28 percent for “wealthy taxpayers” – currently, those taxpayers can deduct charitable giving at a rate of 39.6 percent.
Here are three groups President Trump will cross if he tries to cap charitable deductions, based on President Obama’s failure to do the same:
President Obama’s efforts led to “a tense behind-the-scenes debate” with some of the nation’s “most prominent charities.”
The Washington Post reported that charities spent $21 million over four years “lobbying Congress and the White House to preserve” the deductions.
It goes without saying: some of the largest contributors to charities are wealthy.
The Chronicle of Philanthropy has more context:
Joanne Florino, senior vice president for public policy at the Philanthropy Roundtable, an organization that represents donors, said it was curious that President Obama exempted charitable gifts on those inheritances, yet is still pushing to limit the deduction over all.
“As in previous years, the White House is sending mixed messages to the charitable community about the value of American generosity,” she said in an email. “It leaves us wondering why the president would hold charitable donations harmless in some areas of the tax code but not in others.”
President Trump can cap charitable deductions, but he may be crossing wealthy donors who can also give to presidential campaigns.
#3: (SOME) REPUBLICANS
While Obama pressed to limit the charitable deduction, House Republicans wanted to make some tax breaks for charitable giving “permanent“:
Meanwhile, House Republicans are pushing to make a set of temporary tax breaks for charitable giving permanent. The tax benefits, for gifts of land for conservation purposes, gifts of food to food banks and other charities, and gifts made by retirees straight from individual retirement accounts, are part of a slate of about 50 temporary tax provisions called “extenders” that are usually renewed each year.
Will House Republicans push back on Trump’s effort? Either way, tax reform is shaping up to be a major effort in 2017 (and, just maybe, beyond).
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