April 23, 1998 | Read Time: 2 minutes
Americans would increase their giving to charity by $16.5-billion over the next five years if Congress allowed people who do not itemize on their federal income-tax returns to claim a charitable tax deduction, says a new report.
The report, based on a study by the Price Waterhouse accounting company, found that California residents would provide the greatest share of the anticipated increase — $1.9-billion over five years ending in 2002. (Its findings for estimated increases in each of the 50 states are provided in the table below.)
The study was conducted to determine what difference would be made if a House bill introduced by Rep. Philip M. Crane, an Illinois Republican, became law. Under the legislation, taxpayers who do not itemize would be allowed to deduct 50 per cent of their charitable contributions that exceed a total of $500 each year. A person who gave $750 to charities in a given year, for example, would be able to deduct half of the amount over $500 — or $125 — under the bill.
Independent Sector, a coalition of major charities and grant makers, commissioned the Price Waterhouse study. The coalition has been a long-time proponent of measures to encourage additional giving by expanding the tax breaks available to donors. Non-itemizers used to be allowed to claim charitable deductions, but they lost that option after the tax code was overhauled in 1986.
To arrive at its estimates, Price Waterhouse examined the percentage of residents who do not itemize in each state and the history of charitable deductions claimed by state residents.
For example, about 3.6 per cent of the people who do not itemize live in Michigan, and residents in that state currently claim about 3.6 per cent of all charitable deductions. So, giving equal weight to both of those percentages, Price Waterhouse calculated that Michigan residents would give about 3.6 per cent of the total in new gifts — or $595-million over five years.
The bill introduced by Representative Crane, HR 2499, has 87 co-sponsors and is currently pending in the House Committee on Ways and Means.
For a free copy of the Price Waterhouse report, contact Independent Sector, 1828 L Street N.W., Washington 20036; (202) 223-8100.
