“Overall, incentives to make charitable gifts could suffer somewhat due to the proposed 2% floor on charitable contributions, meaning that only gifts to charity above 2% of an individual’s adjusted gross income (AGI) could be deductible. Moreover, with the increased standard deduction and cuts to other itemized deductions such as the real estate tax reduction, only an estimated 5% of taxpayers would itemize deductions and therefore be afforded the deduction as an incentive to give to charity.”

Rep. Dave Camp (R-MI), Chairman of the House Ways & Means Committee, just unveiled the first major plan in decades to reform the nation’s tax code.

While the primary goals of the draft legislation, according to Camp, were to lower tax rates and to make the code simpler and fairer for businesses and families, the comprehensive draft spanning nearly 1,000 pages contains numerous proposals that would significantly impact Christ-centered churches and charities.

“I salute Rep. Camp for his desire to simplify the tax code, lower tax rates, and close loopholes,” said Dan Busby, president of ECFA. “At the same time, I am very concerned about the reduction in incentives which would negatively impact charitable giving—particularly the proposed floor on the charitable giving deduction and changes to valuation rules for gifts of property.  Additionally, eliminating the rebuttable presumption will allow the IRS to wield too much power against charities.”

The Ways & Means Committee, under Chairman Camp’s leadership, has doubled down in recent years on the goal of comprehensive tax reform. The Committee held more than 30 hearings, organized 11 bi-partisan working groups, and collected thousands of public comments before releasing the “Tax Reform Act of 2014” in late February.

But against the backdrop of a deeply divided Congress and mid-term elections approaching in November, the odds that lawmakers will move forward on tax reform this year are slim. However, the draft legislation should be taken seriously as it will likely set the stage for future discussions on tax reform.

What Should Christ-centered Organizations Know About the Latest Tax Reform Proposals?

If adopted by Congress, several proposals included in the draft legislation could have significant consequences for all Christ-centered organizations and their supporters:

• Mixed news for charitable giving incentives.  Overall, incentives to make charitable gifts could suffer somewhat due to the proposed 2% floor on charitable contributions, meaning that only gifts to charity above 2% of an individual’s adjusted gross income (AGI) could be deductible. Moreover, with the increased standard deduction and cuts to other itemized deductions such as the real estate tax reduction, only an estimated 5% of taxpayers would itemize deductions and therefore be afforded the deduction as an incentive to give to charity.

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