Editor’s Note: Daniel Rashke is CEO and owner of TASC, a Madison, Wisconsin-based benefits administrator, and chairman of The Greater Give, Inc., a non-profit formed to increase philanthropic giving and engagement. Alyssa A. DiRusso is the Palmer Professor of Law at the Cumberland School of Law at Samford University in Birmingham, Alabama. The opinions expressed in this commentary are those of the authors.
(CNN) Over the past century, tax incentives for giving to charity have helped improve American society in countless ways, from spurring medical research to building more vibrant communities to providing a safety net for those most in need.
Yet Congress is now considering changes to the tax code which would greatly reduce the already-too-slim proportion of taxpayers who can benefit from existing incentives for charitable giving. Instead lawmakers should adopt a new approach that treats taxpayers more fairly, broadens the nation’s philanthropic base and helps defray government spending.
Currently, the tax code allows income tax deductions for charitable donations, but only for the roughly one-third of filers who itemize deductions on their returns. Nearly all individual taxpayers in the highest income tax bracket itemize deductions and can reduce their tax obligations through a charitable deduction.
In contrast, fewer than a quarter of Americans making less than $100,000 itemize and thus most are unable to receive a tax reduction from their giving. The proposed hike in the standard deduction that’s now on the table would further discourage taxpayers from itemizing deductions and reduce an important incentive for charitable giving.