Since the founding of this country, Americans have believed in local individuals helping those in need… not government programs administered by Federal bureaucrats.
Unlike Europe where charity is dispensed by government and state-subsidized and approved churches, America had a very different approach.
For this reason, the Federal Government has allowed individuals to deduct contributions to 501 (c) 3 approved churches and charities on their federal income tax return.
In 2017, as a result of major changes in the IRS tax code, tax rates were lowered on both individuals and corporations. We supported these needed reforms designed to keep more money in the pockets of Americans and businesses.
However, one of the less desirable effects of the 2017 Tax Reform Act has been to create a disincentive for many to donate to churches and other 501 (c) 3, charities, which is the real foundation of what grassroots Americans do to help those in need.
The 2017 Tax Reform Act allows taxpayers to decide whether they want to itemize tax deductions or not. Those who choose not to itemize are given a standardized deduction. By taking the standardized deduction, taxpayers are then allowed to deduct $600 for charitable on a joint return or $300 when filing a single return.
The vast majority of taxpayers with incomes in excess of $250,000 are still itemizing with lower individual tax rates. However, middle income taxpayers, including many small business owners, have not been helped because of their inability to make tax-deductible contributions to their churches and charities as they had previous to the 2017 tax act if they are choosing the standard deduction.
Here is a specific example:
Small business taxpayer
Gross Income $120,000
Standardized
Deductions
Non-itemized $70,000
Net taxable income $50,000
This individual is now allowed to deduct only $600 when filing a joint return. This discourages charitable giving from people of Faith, who attend church or Temple weekly. This also discourages giving to many other charities that do so much to support people in need in our local communities. American Red Cross, Boys Town, Feed America, are a few examples.
Although Church attendance is down in America, partially because of Covid, it is important to realize that middle income contribution to many charitable institutions are also less.
We propose that the $600 charitable deduction for those filing joint returns and taking the standard itemized deduction be increased to $7500.
We propose that the $300 charitable deduction for those single taxpayers using the standardized deduction be increased to $5000.
We believe this will allow churches and private charities to be able to play an even greater role in helping those less fortunate….including children, single moms, the hungry, etc.
This simple change, which will be communicated by charities and churches to their members and donors, will re-energize private giving.
Obviously, support of this proposal by political candidates will energize people of Faith across our Country.
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