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Support a Two-year Universal Charitable Deduction to Encourage Giving to Charities
Southern Baptists affirm tax policies that incentivize charitable giving. Both families and the government hold an interest in charitable giving so that the voluntary sector of our nation realizes its fullest potential. The institutions of a healthy civil society—houses of worship, poverty relief organizations, education, the arts, and more—depend on charitable giving. Therefore, we object to any tax policy that would have a chilling effect on charitable giving. We urge Congress to extend the Charitable Deduction to all taxpayers, not just those who itemize.
The current tax system excludes an important incentive for charitable giving. Since the passage of the Tax Cuts and Jobs Act of 2017, taxpayers must first itemize their tax return in order to claim the Charitable Deduction. An increase in the Standard Deduction has provided welcome relief to many taxpayers, but the system has drastically undercut the number of itemizing taxpayers and therefore reduced those incentivized to give more to charity. Less than 5% of taxpayers are currently able to claim the Charitable Deduction.
Tax policy influences giving behavior. The Charitable Deduction is the only deduction for which the taxpayer receives no other material benefit (compared with the mortgage interest deduction or tuition deduction). The deduction simply encourages voluntary financial giving. Many people donate to charity because of moral or religious motivations, but research confirms that charitable giving still responds to government policy, particularly when incentives for giving are reduced. Without the Charitable Deduction, taxpayers continue to give, but they do give less.
Those served by charity are the direct beneficiaries of the Charitable Deduction. Institutions of civil society remind us we are not merely economic units managed by a government bureaucracy. Rather, we have obligations to one another as neighbors. In an era where government budgets are already under high pressure, the last thing lawmakers should do is risk the viability of private sector charity. When private sector charities reduce or cease operations, their clients have few options other than to join government social service programs, which further burdens already excessive government budgets.
The ERLC calls for a Universal Charitable Deduction (UCD). A UCD would reward charitable giving from all taxpayers, not just those in upper income brackets who itemize their deductions. Our government should welcome the generosity of citizens at all levels of income who desire to help their neighbors through charitable organizations.
SBC Actions
Southern Baptists spoke to charitable giving in the 2013 Resolution On Tithing, Stewardship, and the Cooperative Program.
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