Economics Department


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Published in National Tax Association 2007 100th Annual Conference Proceedings, (2008). Used by permission.


Of the $240.7 billion donated to U.S. charities in 2003, 75 percent was from individuals. Of that total, $145.7 billion was taken as itemized deductions on federal income tax returns. In addition, non-itemizers and non-filers contributed $33.0 billion – contributions that received no special tax treatment. Under current law, only taxpayers who itemize may deduct from Adjusted Gross Income (AGI) their charitable donations in determining taxable income. In recent years, a number of different proposals have been put forth that would alter the tax treatment of giving by individuals. Some plans would extend a variant of the charitable deduction to non-itemizers (see CBO, 2002, 2007). Other plans — some components of fundamental tax reform — would make changes such as imposing floors (or minimum levels of giving) that must be met before deductions are permitted or replacing the deduction with a nonrefundable tax credit.

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