Tax Change Could Stem Giving,Private Schools, Charities Warn

September 12, 1990 2 min read

Washington--Private school groups last week joined with other private organizations to warn that any proposal to limit the tax deductibility of charitable contributions would hurt giving to their institu tions. White House and Congressional negotiators were to meet again beginning late last week to try to hammer out a deficit-reduction agreement for the federal budget. Charitable groups were responding to reports that among the proposals on the table will be ones to limit the income-tax deduction for charitable giving.

“At a time when government is expecting voluntary services to be expanded, it is not fair or realistic for government to begin to tax contributions,” Brian O’Connell, president of Independent Sector, a coalition of some 700 private organizations, said at a news conference here.

Private organizations have geared up quickly to lobby against any curbs on charitable deductions, in part because they believe they have suffered from the 1986 tax-reform law, which eliminated the charitable deduction for taxpayers who do not itemize and changed the treatment of gifts of appreciable property.

One proposal floated by budget negotiators would place a 2 percent floor on deductions for charitable gifts, said John W. Sanders, vice president of the National AssociL4ation of Independent Schools. For a (family with an adjusted gross income of $50,000, that would mean the first $1,000 in contributions could not be deducted.

“The charitable tax incentive is a major government policy that symbolizes the importance of charitable giving,” Mr. Sanders said. “It is not a loophole or a self-helping incentive at all. We think it is bad public policy to move in this direction.”

Another deficit-reduction proposal would set a cap on total deductions, including those for state and local taxes, mortgage-interest expenses, and charitable contributions.

Many taxpayers would reach their limit just with state and local taxes and mortgage interest, “with nothing left over to be deducted for charitable contributions,” Mr. McConnell said.

Joyce McCray, president of the Council for American Private Education, said most private schools de pend on voluntary gifts to balance their budgets.

“Unfortunately, we know that the tax incentives are one of the most powerful incentives for giving,” Ms. McCray said. “If you take away those incentives, you’ve got a very serious crisis.”

Charitable contributions make up approximately 10 percent of the an nual budgets for most independent schools, said Margaret W. GoldsborH ough, a spokesman for nais--mw

A version of this article appeared in the September 12, 1990 edition of Education Week as Tax Change Could Stem Giving,Private Schools, Charities Warn