Yesterday, Congress took key steps in paving the way for comprehensive tax reform legislation, and museums have a lot at stake.
The Practical Impact of Budget Resolutions
After months of uncertainty, the U.S. House of Representatives passed its Fiscal Year (FY) 2018 budget resolution. A few hours later in the U.S. Senate, an FY 2018 budget resolution was passed by the Senate Budget Committee. While the details of these nonbinding documents vary, there is one clear practical impact if the two chambers of Congress eventually adopt the same budget resolution: tax reform only requires a simple majority (e.g. 51 votes in the U.S. Senate) and therefore becomes more likely to happen.
Tax Reform Framework Released
Last week, the Trump Administration and Republican leaders released a 9-page outline that will form the basis for tax reform legislation to be written in the weeks ahead. While many of the specifics remain uncertain until legislative language is released, this Unified Framework does contain some commendable language that is supportive of charitable giving and the charitable tax deduction. However, other aspects of the Framework would dramatically reduce donations to museums and other nonprofits.
Specifically, the Framework proposes nearly doubling the standard deduction, which would reduce the proportion of taxpayers who itemize their deductions from roughly 33 percent to just 5 percent. Because only those who itemize can claim the charitable deduction, this would effectively eliminate the tax incentive for 30 million Americans to donate to museums and other causes. A recent study conducted by Indiana University found that a similar proposal could cause charitable giving to decline by up to $13 billion annually.Skip over related stories to continue reading article
To prevent the immense harm that this drop in giving would cause to communities, the Alliance is working with the Charitable Giving Coalition in calling on Congress to enact a universal charitable deduction available to all taxpayers, regardless of whether they itemize. In addition to spurring increased donations to museums and other nonprofits, a universal charitable deduction could help deepen the culture of giving nationwide.
P.S. The Senate is in recess next week, and the House will be in recess the following week, which means that legislators may be back in their state or district. Please don’t hesitate to contact us for help.