Religious leaders are worried about the impact President Kennedy’s tax reform would have upon charitable contributions.
A number have already expressed concern over the new rules proposed for itemizing tax deductions.
As set forth in Kennedy’s tax message to Congress last month, all deductions—including those claimed for church and other charitable contributions—would be subject to an overall 5 per cent “floor.” This means, in effect, that itemized deductions would be limited to those in excess of 5 per cent of the taxpayer’s adjusted gross income.
In filling out his return, therefore, the taxpayer would add up all his deductions (charitable contributions, medical expenses, interest payments, and so forth), then reduce that total by 5 per cent of his adjusted gross income.
At present, the average taxpayer may deduct all charitable contributions up to 20 per cent of his gross income, and up to 30 per cent in the case of donations to churches, educational institutions, and hospitals. If he chooses not to itemize deductions, he may claim a “standard deduction” which amounts to about 10 per cent of his income.
Kennedy’s proposal would extend the 30 per cent limit to “all organizations eligible for the charitable contributions deductions which are publicly supported and controlled.”
The President asserted that “present law permits a handful of high income taxpayers to take an unlimited deduction for charitable contributions, instead of the 20 to 30 per cent of income normally allowable.… They should be limited to the same 30 per cent deduction for charitable contributions as everyone else.”
It is estimated that more than 40 per cent of all individual income-tax returns are filed by people who itemize deductions. Kennedy said that under ...1
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