Baucus Comments on Income Tax Charitable Deduction and Estate Tax
Click "Continue Reading" to view the statements of Senator Max Baucus (D-MT) (chairman of the Senate Finance Committee) made on the floor of the Senate last week. He opposed an amendment proposed by Senator John Thune (R-SD) to President Obama’s budget. Obama proposes limiting deductibility for charitable gifts for high income taxpayers to a 28%. Senator Thune’s amendment would have eliminated this deductibility cap. The amendment failed - 48 for and 49 against.
For Immediate Release Contact: Dan Virkstis
Thursday, March 26, 2009 202‐224‐4515
Floor Statement of Senator Max Baucus (D‐Mont.) Regarding an Amendment on Charitable Contributions
The amendment offered by the Senator from South Dakota would state the sense of the Senate
that the tax law should not be changed in any way that would discourage taxpayers from
making charitable contributions and gifts.
This country has a proud tradition of charitable giving.
We are proud of that tradition. We are proud that we give to those in need.
And we should encourage people to keep on giving. And one of the ways we do that is through
the itemized deduction for charitable giving.
We very much support the itemized deduction for charitable giving.
But the Senator’s amendment is overbroad. It would put the Senate on record as favoring
preservation of incentives for charitable giving over all other priorities.
Let me talk about a few other priorities that the Senate might want to consider.
What about cracking down on tax cheats? What about balancing the budget? What about
repealing the death tax? The Senator’s amendment could be read as conflicting with each of
those other priorities.
Let me explain.
Let’s say that a tax cheat sets up a charity that is really a scam.
Should the IRS be able to crack down on that scam? Of course it should.
But the Senator’s amendment says that we should preserve the full income tax deduction, end
of sentence.
Let’s say that we want to repeal the estate tax. Some call it the death tax. And there’s pretty
wide agreement that it is a pretty disagreeable tax. But studies have shown that repeal of the
death tax would decrease charitable giving.
Shouldn’t we scale back the estate tax anyway? Of course we should.
But the Senator’s amendment would put the Senate on record that we always want to
encourage charitable giving rather than discourage it.
What if we reach a bipartisan budget agreement to limit the deficit and help to balance the
budget. Might we want to consider, I say just consider, limiting the ability of upper‐income
taxpayers to take their full deductions?
This is not so far‐fetched an idea. Under current law, itemized deductions are already limited
for high income givers — taxpayers with more than $166,800 in income. Congress enacted that
change as part of a bipartisan budget agreement, negotiated by OMB Director Dick Darman,
and signed into law by the first President Bush.
And yet these Americans still give. Americans who itemize deductions as well as Americans
who don’t itemize continue to give.
According to CRS, only 30 percent of taxpayers claim a deduction for charitable giving. Yet we
know that many more give to charity. The group Independent Sector found that 70 percent of
households give.
Thankfully, many taxpayers make charitable contributions even though they are not getting any
tax benefit at all. Indeed, one might say that the greatest charity is when someone gives from
the heart, whether it is tax deductible or not.
So we do not need the extreme statement in the Senator’s amendment.
Rather, I have offered a side‐by‐side amendment that emphasizes Congress continued support
of tax incentives for giving. Let’s show our support for charitable giving, without making the
categorical statement in the Thune amendment.
I urge my Colleagues to oppose the Thune amendment and support the Baucus amendment.
