Should Sector Relinquish Charitable Tax Deduction as Act of National Leadership?

July 8, 2011; Source: Los Angeles Times | NPQ has, of course, long been following the discourse about possible elimination of the charitable tax deduction.

Now in this op-ed from the Los Angeles Times, Alan Luks urges nonprofit leaders to take a leadership role in the country by giving up the charitable tax deduction – and urging other corporate entities to do the same. In this way charities would be acting as “the conscience of the nation,” which says Luks, is what the country expects of us.

Luks, who is the former director of Big Brothers Big Sisters of New York City, writes:

“The independent Congressional Budget Office recently reviewed 11 options for revising the income tax treatment of charitable giving, and it grouped them into four categories. All establish a floor below which contributions would not be deductible. One proposal retained tax deductibility only for donations exceeding $1,000 per couple or, alternatively, 2% of a person's adjusted gross income. Under this example, the report estimated that individuals who itemize deductions would pay $15.7 billion in additional taxes yearly to the government. But charitable agencies could experience a loss of up to $3 billion (1.5% of the more than $200 billion now given annually by individuals).

That loss should be accepted by charities as the cost of leadership needed by the country now.”

Where Luks’ proposal falls short is in his assumption that this collective act would embarrass corporations into following suit. That part of his argument beggars credibility. What do you think about this issue and nonprofits taking a more active role in tax policy generally?—Ruth McCambridge