Not everyone is naturally charitable especially when times are tough and others can barely afford to live decently. Doing random acts of kindness helps perpetuate charity even in our own little ways. You don’t always have to give a lot. Even the simple things matter to people who barely have anything to eat. In a nation like America, citizens are encouraged to be charitable. There are tax breaks they can take advantage of by sharing more of what they have to the less fortunate.
The truth is that most philanthropists and donors are rich businessmen and corporations. They not only help certain causes and uplift the lives of others who are desperate for help but they also help themselves by reducing their tax dues to the state. The bigger the tax break is, the more inclined people are to give and donate. And that is a big question now in Trump’s America. Tax breaks are doubling in his administration, but is it still the best time to be more charitable than ever if you still get tax deductions even without making the necessary donations?
While Capitol Hill and much of the nation have been following the roller coaster of debate surrounding what will come of GOP efforts to repeal and replace the Affordable Care Act, some are focused on what President Donald Trump’s proposed tax plan might mean for charitable giving.
His proposed tax plan would place a cap on total itemized deductions, including those for charitable giving. By raising the standard deduction and eliminating the estate tax, experts say that this plan would reduce incentives that often prompt donations to charities.
According to Giving USA’s “Annual Report on Philanthropy,” individual donors drove the rise in philanthropic giving seen in 2016. Giving to religion increased by 3 percent, 1.8 percent adjusted for inflation, in 2016, with an estimated $122.94 billion in contributions. This accounted for 32 percent of all charitable giving in 2016, which totaled $390.05 billion.
Approximately 30% of citizens itemize their tax deductions but the remaining doesn’t and the former belong to higher income households or rich businessmen with a lot to benefit from this tax scheme. That means the rest of the American populace don’t benefit from these tax breaks and rather opt for the standard and less troublesome deductions. The new tax break encourages spouses to file their tax separately to avail of separate deductions with more money taken home for the family.
The nonprofit sector is pressuring lawmakers and the White House to protect the charitable tax deduction.
The tax-reform plans released by the Trump administration and House Republicans would keep the deduction for charitable donations, but also increase the size of the standard deduction, likely reducing the number of people who would use the tax preference.
Groups in the nonprofit community say that policy change would have disastrous consequences, cutting into charitable donations nationwide.
They are pushing for tax reform to allow all taxpayers to use the charitable tax deduction, even if they don’t itemize on their filing — a so-called universal charitable deduction.
If you look at the new tax plan closely, Americans would enjoy bigger tax deductions even if they don’t give out donations to charitable causes. As a result, charitable giving will decrease by as much as $13 billion each year. Meanwhile, the Trump administration rebuts by saying that more prosperous citizens are more inclined to give when they have more than enough for their family. Only time can tell what will become of Trump’s America. For now, let us all do our part of being responsible citizens who work responsibly and pay their due taxes on time without neglecting our moral responsibility of extending help to those in need.