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Charities: Continue donation tax breaks

LaKisha Bryant, right, CEO of United Way of Southwest Georgia, prepares to address the House Ways and Means Committee on Thursday.

LaKisha Bryant, right, CEO of United Way of Southwest Georgia, prepares to address the House Ways and Means Committee on Thursday.

ALBANY, Ga. — The head of the Albany branch of the United Way testified Thursday before Congress on the importance of keeping the charitable donations tax exempt.

LaKisha Bryant, the CEO of the United Way of Southwest Georgia, was one of two Georgia CEO’s to speak before the House Ways and Means Committee on Thursday, an honor she posted about on Facebook following her testimony.

“Speaking today before the Congressional Ways and Means Committee was amazing!” Bryant posted. “I’ve spoken to reps on the Hill before, but this was my first time in the congressional hearing format. I’m blessed to have the ability to share my passion about what I do with others and also the opportunity to share the first hand impact I know United Way programs have on the countless lives of members of our community.

“And it’s important that we all pay attention to the possible changes to the charitable deduction tax code.”

Bryant was one of 13 United Way CEO’s from across the country to speak to lawmakers on Thursday when representatives of charitable groups pleaded with U.S. lawmakers to not alter the federal tax break for donations, while some Democrats said the popular deduction was in no danger and called the Republican-convened hearing a red herring.

Officials from hospitals and dozens of other non-profit groups packed a House of Representatives’ Ways and Means Committee session examining the write-off used by more than 30 million Americans at a cost to taxpayers of $38 billion a year.

A repeal of the charitable donations deduction is not imminent, but plans to cap tax breaks generally for the affluent are backed by President Barack Obama. Some Republicans, too, have expressed support for such an idea.

“Please don’t be fooled into thinking that limiting the charitable deduction will only impact wealthy taxpayers,” said Brian Gallagher, president of the non-profit group, United Way Worldwide, who spoke on the first of six panels testifying before the committee.

Limiting the break “would have a far greater impact on charitable giving than many estimates and significantly affect our sector’s ability to deliver social services,” said Gallagher, who has spent more than 30 years studying why donors give.

According to an analysis by the Tax Policy Center presented at the hearing, under one proposal to cap deductions, giving to charities could fall by between 2.5 percent and 4.8 percent.

Dave Camp, chairman of the House panel, fought off criticism from Democrats who said that by calling the hearing he caused an unnecessary stir in the non-profit community.

“Our nation’s public charities and private foundations perform invaluable services for our society,” he said.

The Ohio Republican aims to propose legislation to revamp the tax code this year. Senate Finance Committee Chairman Max Baucus, a Montana Democrat, is working on his own plan.

Some Democrats have recently called for limiting tax “loopholes” and other tax breaks for the wealthy. They have not targeted the donations deduction, but a White House deductions cap proposal may reappear in Obama’s forthcoming budget plan.

“The charitable deduction is not a loophole,” said Sandy Levin, the top Ways and Means Democrat. But he said that any limitation should not be considered a “transfer to the government,” as one of the witnesses suggested.

The wealthy do get more out of the donations deduction than others. Congress’ Joint Committee on Taxation said 20 percent of the tax break’s benefits go to those earning less than $100,000 a year, while those with incomes above $200,000 get 55 percent.

Levin questioned the timing of the hearing, when an $85 billion cut to federal spending is set to take place on March 1 and the parties are still far apart on preventing these cuts.

“We are holding this hearing on an important, but not very immediate topic,” he said.

Gifts to charity are tax deductible in the United States, along with mortgage interest and other expenses. Taxpayers can cut their tax bills by adding up these deductions and taking the total off their taxable income.

Wealthy people can benefit more than those with lower incomes as their deductions lower their income in the highest tax bracket of 40 percent, while others would apply the deductions to their lower tax rates, saving them less money.

Creating a donations tax credit for those who do not claim deductions and improving enforcement of abuse were among the ideas suggested by experts and industry officials.

The charitable giving deduction is one of the 10 costliest individual “tax expenditures,” or provisions of the tax code that favor certain groups or activities with preferential treatment.

Xavier Becerra, a California Democrat, said that despite the great work done by non-profit groups, the deduction must be examined so that taxpayer dollars were used effectively.

For example, he noted wealthier donors tended to give to organizations that do less than other groups to meet basic needs of the poor.

Because of the pressure to limit federal spending, he said, “this important sector does deserve some critical examination.”

Albany Herald staff writer J.D. Sumner and Reuters News Service contributed to this report.

Comments

waltspecht 1 year, 6 months ago

By allowing tax deductions, we are the ones supporting the Charity. In many cases, it might be a Charity of non-profit we do not support. Yet we are currently forced to pay increased taxes to replace the money not collected when people are allowed to write it off. Look at the recent scandles involving the vouchers charities were issueing for cars and boats turned over to them. Found to be far in excess of real value and thegovernment found it necessary to crack down. Then there are the Executives running the charities making three and four figure salaries. I have always contributed to the Salvation Army, because you actually get the most bang for the buck. I have never claimed the contribution because I do it at the kettles. That way I stay off mailing lists. So with no tax deduction, I would still continue to give. Afterall, it is supposed to be about the giving, not the getting of a tax writeoff.

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FryarTuk 1 year, 6 months ago

All tax loopholes should be ended. Charitable donations, trusts, offshore accounts, foreign earnings, congressional perks, lobbyists gifts end all of it and pay up.

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FryarTuk 1 year, 6 months ago

I would also add that churches and church property should be taxed accordingly. Render unto Caesar.

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whattheheck 1 year, 6 months ago

If one looks at the financial reports of charities, and Phoebe is a good example as a "charity hospital", it can be seen that the saying "charity begins at home" is correct since those closest to the piggy bank get hands on it first. Visit guidestar.org and sign up for a free account that lets you look at a lot of information on charities and non-profits. The financial information that can be seen for free is the IRS Form 990s submitted annually.

Looking at the local United Way 990 for year ending 6/30/2011, the charity took in about $1.2 million and paid out about $300,000 in salaries, a hefty 25%, including about $107,000 to Bryant's predecessor Dwayne Myles. Nice work if you can get it, eh? Now I am sure there are those who will tout what wonders are done by those who split the funds. Who would not want to keep this ball rolling?

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chinaberry25 1 year, 6 months ago

Years ago an exec at the United Way used money to have his girlfriends car fixed. They may not do it now, but I will never give to them again. I also give to the Salvation Army and Humane Society. Both are pretty true to their causes.

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agirl_25 1 year, 6 months ago

I will NEVER give money to any charity except St. Jude's, and the Shriner's. I donate bags of pet food on a regular basis to our local small county shelter and to the Humane Society when I am in the larger city. I have first hand knowledge of the wonderful work that St. Jude's and the Shriner's do for children irregardless of one's ability to pay. Having worked as a Home Health nurse for years I came in contact with many Shriner's Club members from all walks of life who gave their time to help so many children and I am proud to support them and any organization that helps children. I love animals and they give love unconditional....I want to help them.

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