ACGA Defends Tax Incentives That Support Charitable Giving

The American Council on Gift Annuities (ACGA) issued a statement to the United States Senate Finance Committee in defense of tax incentives that support charitable giving.

In summary, the statement contained five major points (provided below):

1. Curtailing the tax incentives to charitable giving would adversely affect the people served by America’s charities.

2. The current incentive that allows tax-free IRA rollovers for direct (outright) transfers to specified categories of charitable organizations expires on December 31, 2011 and should be made permanent.

3. Chairman Baucus, at the October 18, 2011 hearing, stated:

“Most Americans aren’t able to receive tax benefits from the charitable deductions since they don’t itemize. Less than one-third of taxpayers itemized their deductions last year.”

The IRA/charitable rollover is unique in that it does give tax incentives to the two-thirds of the taxpayers who don’t itemize, but take the standard deduction. Although no charitable deduction is allowable for IRA/charitable rollovers, the rollovers aren’t taxable. Not being taxable on income that would otherwise be taxable is the equivalent of a charitable deduction.

4. The tax-free IRA/charitable rollover should be expanded to include life-income charitable gifts — gifts that pay income to the donor for life, with a remainder to a qualified charity. This would be at no revenue loss to the government because annual payments to the donor would be fully taxable at ordinary income tax rates.

5. With decreased federal, state and local government support and the increased burdens on charities to serve our people, now is the time to increase, not decrease, the long-established and successful tax incentives for private support for the public good.