National Service Reauthorization Act

Floor Speech

NATIONAL SERVICE REAUTHORIZATION ACT -- (Senate - March 26, 2009)

BREAK IN TRANSCRIPT

Mr. THUNE. Madam President, if I might, I will speak to the amendment I have filed, which is pending and to which the Senator has now offered a side-by-side.

I want to point out, in terms of the way charitable giving works in the country today, how the deduction applies, if you are in, say, a 35-percent tax bracket, a high-income-tax payer, and if you give $10,000 to a charity, it is actually only costing you $6,500. You are getting a 35-percent tax break.

What the administration's proposed budget would do is reduce the favorable tax treatment an individual who gives to a charitable organization would get in the 35-percent tax bracket down to 28 percent. In other words, if somebody gives $10,000 to a charity--say a religious organization or some university--the benefit they would derive, in terms of tax treatment, would go from $3,500 to $2,800. In other words, instead of costing them $6,500 for that charitable contribution of $10,000, it would cost them $7,200. So you would see an increase of 10.8 percent in the amount it would cost someone to make a $10,000 contribution. After the tax treatment is applied, it would cost them $7,200 under the proposed budget we have seen from the administration.

What my amendment simply does is say we ought to keep current law in place with regard to the tax treatment that is applied to charitable contributions. Here is why it is important--particularly now. We have an economy that is struggling. We have lots of charitable organizations that are noticing a dropoff in their contributions because of the economy. People are seeing a reduction in the values of many of the assets they have had, and people are losing jobs. There are a lot of reasons charitable giving is dropping off, and many of the organizations are faced now with a very difficult challenge in order to be able to keep up and meet the needs they are meeting out there across this great country.

We rely, as a nation, significantly on the good-heartedness of the American people when it comes to contributing to many of these fine organizations that are doing good work. I think we ought to keep that same incentive in place--particularly now more than ever. The timing is critical because you are talking about taking away a tax benefit from people who give to charitable organizations at a time when those organizations are already suffering from a drop off in giving.

So my argument would be--and there is a substantial body of evidence out there that suggests this--that when you reduce the tax benefits for charitable giving, say, by about 10 percent, you get about a 10-percent dropoff in giving. In other words, if you did take the 35 percent that currently would apply--if somebody is in the 30-percent tax bracket and makes a $10,000 contribution and deducts that on their income taxes, they get a 35-percent benefit on that, which means a $3,500 savings or, in other words, the actual $10,000 is only costing them $6,500.

But if you change the tax treatment, as is being proposed by the administration, and make that a 28-percent tax benefit, you then increase the amount the $10,000 contribution is costing the giver, the contributor, to $7,200, which is a 10.8-percent increase in the actual cost of that contribution.

As I said, if the data that is out there is accurate--and I believe it is because I think it is substantial--when you reduce that tax benefit by 10 percent, you also get a 10-percent reduction in the amount that individual would give. I think that is significant, particularly now when you look at the amount the American public gives to charitable organizations. You are talking about anywhere from $8 billion to $16 billion a year in reduced charitable giving in this country. Multiplied over a long period of time--5 to 10 years--you are talking about $160 billion, and potentially over 10, that would not be going into these charitable organizations that are serving great purposes across this country.

I think it is fitting right now to have this discussion. People say: Why don't you do this next week on the budget? We probably will because this is a part of the budget proposal. It is also important to talk about this now because we are talking about expanding programs that the government runs right now, which are designed to do good things out there, and to hire volunteers to do charitable work and perform tasks that are contributing to the greater good. Since that debate is focused on what the government can do, I think it is fitting to talk about what people in this country are already doing in the private sector--individuals who have been blessed by this country and are willing to give something back. I think we ought to encourage more of that not take away from the incentive to do that today.

As I said yesterday in my remarks when I offered this amendment, I don't believe anybody makes a charitable contribution simply because of tax policy. I think people give because they want to give. I do, however, believe tax policy influences the amount of giving an individual makes. The statistics bear that out.

If you have a 10-percent reduction in a tax benefit accorded to somebody who is making a charitable contribution, you are going to see about a 10-percent reduction in the amount of their contribution. That could cost charities significantly all across the country. That is why so many of them have weighed in and suggested that they think it would be a very bad time to go ahead and make this change in tax policy.

My amendment expresses the sense of the Senate--nothing more or less--that puts this body on record saying we ought to keep the full deductibility of charitable contributions as a matter of tax policy in this country.

I think that is a debate that, again, hopefully we will have next week as we debate the President's budget. But I think the President's goal in this is to try to find ways to generate revenue to do other things in their budget. I think this is a bad place to get it. I do not think the savings you are achieving as a result of taking away this tax benefit to charitable giving in the long run is going to in any way offset the decrease we are going to see from people across this country who might otherwise make charitable contributions who, because you take away that tax benefit, are going to see the actual cost of those contributions go up and therefore affect the amount they might otherwise give.

I hope the Senate will go on record. The side-by-side offered by my colleague from Montana affirms the deductibility of charitable contributions from income tax but takes out the word ``full.'' What my amendment does is retains what we have today in terms of tax law, tax policy in its treatment of charitable giving, charitable contributions, and retains the full deductibility of those charitable contributions.

It is important that the sense-of-the-Senate amendment I offered that expresses the view of this body about the deductibility of charitable contributions be the one that we vote on and that we reject the side-by-side that is being offered by the Senator from Montana because it does take away the word ``full,'' which opens the door for changes that will occur in the budget that is going to be offered next week and would reduce the amount--the tax benefit that is accorded to those who make charitable contributions.

I hope when we get to the vote--it does not sound as if it is going to occur until later this afternoon--the Senate will support the Thune amendment, the sense of the Senate affirming support of the Senate for the full deductibility of charitable contributions, and reject the side-by-side offered by the Senator from Montana which does not include the affirmation of full deductibility of that tax benefit. Bear in mind, this is a sense of the Senate. It is not binding, it is not law, but I do think it puts the Senate on record in terms of our full support of full deductibility of charitable contributions.

As I mentioned, timing is important. Right now, with what is happening in the economy and how it is impacting charitable giving to charitable organizations, this is the absolute worst time to be talking about taking away the tax benefit that has produced so much giving and added to the giving people might otherwise do by providing favorable tax treatment. It is an incentive that has worked. It has worked in spades if you look at the amount of giving that occurred in this country in 2007. The number I used in the amendment is $300 billion--2 percent of the GDP--American people contributed to causes greater than themselves. We ought to encourage it, not discourage it. Adopting my sense-of-the-Senate amendment would do that. I hope my colleagues will support it.

I yield back the remainder of my time.

BREAK IN TRANSCRIPT

AMENDMENT NO. 716

The PRESIDING OFFICER. Under the previous order, there will now be 2 minutes of debate equally divided prior to a vote on amendment No. 716, offered by the Senator from South Dakota, Mr. Thune.

The Senator from South Dakota.

Mr. THUNE. Mr. President, my amendment simply expresses the sense of the Senate that we maintain present law with regard to the deductibility of charitable contributions, that we allow or maintain the current tax treatment practice with regard to charitable contributions, and that is to allow full deductibility. The amendment we just voted on by the Senator from Montana opens the door to something less than full deductibility. I think it is important for the Senate to be on record, particularly in light of the challenges being faced by many charitable organizations these days to keep up with giving.

There was a story in the New York Times this morning that says only 12 percent of charitable organizations expect to end the year with an operating surplus.

Dianne Aviv, president of Independent Sector, a national membership organization of charities, said any decrease in charitable giving caused by Obama's proposal, no matter how small, would be ``seen as a stake in the heart.''

With all other means of income down, the idea that there will be another potential cut to the income of those nonprofit organizations feels catastrophic. It is utterly unacceptable.

We have an opportunity to make a statement here expressing the view of the Senate confirming the current tax treatment for charitable contributions, full deductibility.

BREAK IN TRANSCRIPT

Source