Urban Institute Estimates Effects on Giving of Camp Reform Plan

The Tax Policy and Charities Project of the Urban Institute has released preliminary estimates of the impact of Chairman Dave Camp’s tax reform plan on charitable giving. The overall estimate is that giving would decrease by 7 to 14 percent if the entire plan were adopted. The wide range is due to uncertainty about individual responsiveness to the tax incentive. The estimate is broken into four parts, taking into account: changes to the rate structure, the increase to the standard deduction, modifications to other itemized deductions, and direct reforms to the charitable deduction itself (e.g., the 2% of AGI floor and percentage limit changes). The estimate finds that the marginal tax benefit attributable to the charitable deduction would fall by nearly half, from about 23% to 12%.

Here is the abstract: This note estimates the effects of four groups of provisions from the Tax Reform Act of 2014 on individual charitable giving. The provisions of the tax reform plan, released earlier this year by House Ways and Means Committee Chairman Dave Camp (R-MI), are estimated to decrease individual giving by 7 to 14 percent.

Roger Colinvaux