Nonprofits worry new federal tax law will impede charitable giving

On January 1st of this year, Congress passed anew tax law that places limitations on tax deductions for high earners. Under thenew law, the limits on deductions reduce the value of all itemized deductionsfor individuals earning more than $250,000 and married couples earning more than$300,000.

Consequently, charities and nonprofitorganizations fear the new limits will frustrate the charitablegiving/donations on which they rely. However, experts do not believe the newlimits will reduce charitable giving. Instead, experts believe the new lawoffers incentives for high earners facing the increase in tax rates to searchfor deductions. Sandra Swirski, executive director of the Alliance forCharitable Reform, explains the “charitable deduction incentive is differentthan any other deduction or credit in the tax code.” This is because charitabledeductions encourage people to give away some of their income unlike otherdeductions and credits that encourage people to purchase things and write themoff.

That the fears of the nonprofit organizationsare at variance with the optimism of the experts poses interesting questionsconcerning the factors that may influence incentives for charitable giving. Doindividuals donate for the tax benefits? Are individuals motivated by their ownsense of altruism?

http://news.yahoo.com/charities-worry-tax-law-reduce-donations-183701251.html

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