Senators: Keep charitable deduction out of tax reform

A group of powerful senators spanning the political spectrum are calling on top tax writers to steer clear of trimming the charitable tax deduction in any tax reform effort.

The coalition of 35 senators, 17 Republicans and 16 Democrats, argued that the cherished deduction is not a loophole but “a lifeline for millions of Americans in need.” The letter was noteworthy for the senators who agreed to back it. Centrists like Sen. Susan Collins (R-Maine) appeared alongside conservatives such as Sen. Tim Scott (R-S.C.) and liberals like Sen. Ed Markey (D-Mass.).

The letter was helmed by Sens. John Thune (R-S.D.), a member of Senate GOP leadership, and Ron Wyden (D-Ore.), the man many assume will be the next head of the tax-writing panel.

The letter was sent to Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Orrin Hatch (R-Utah), the top Republican on the panel. Baucus has been nominated by the president to serve as the next ambassador to China.

Congressional tax writers have spent months scouring the tax code in a complex effort to overhaul the nation’s tax laws, and insist they are looking at every provision with a fresh, scrutinizing gaze. But the broad group of senators contended Thursday that the charitable tax is unique and should be left untouched as part of any overhaul effort.

They argue that, if Congress were to trim the deduction or eliminate it altogether, it might raise governmental revenue, but at the expense of millions who rely on charitable giving, incentivized by the tax code, to provide support.

“The charitable deduction is unique. It is the only provision that encourages taxpayers to give away a portion of their income for the benefit of others,” the senators wrote. “Analysis has repeatedly shown that proposals to cut, cap, or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually.

“We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges,” they added.

Backers of the deduction cheered the letter, calling it a “clear signal” on the importance of the charitable deduction.