Baucus Floor Statement 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 emphasize 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.

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