In the closing hours of the 101st Congress, a flurry of last-minute activities produced an avalanche of legislative accomplishments. Several key measures were attached to the omnibus budget agreement, while other bills were rammed into passage by legislators trying to beat the expiration of the session. As the dust settles from the budget battle and last month’s elections, observers are getting a clearer picture of what took place this term:

Taxes and the budget. Nonprofit groups are breathing a sigh of relief that the charitable deduction was left largely intact. Budget negotiators agreed upon a “3 percent floor” on all itemized tax deductions, including charitable contributions. The floor will apply only to those itemizers with an income above $100,000.

According to Independent Sector spokesman Bob Smucker, the floor will have very little impact on charitable giving, since nearly all taxpayers in that bracket will exceed the floor with other deductions, such as mortgage interest and state and local taxes. “The charitable contribution of 99.9 percent of all taxpayers will not be affected at all,” he said.

Although charities are dismayed at any restrictions on the deduction, they consider this a victory. At the beginning of the negotiations, some in Congress and the administration were pushing for a severe scaling back of the charitable deduction.

Meanwhile, Christians are taking a look at how the budget agreement will affect justice and family issues (see “The Budget: A Closer Look,” p. 44). The Family Research Council (FRC) is charging that the budget is “taxing children” with its phase-out of the dependent exemption in upper-income brackets. “This is not a ...

Subscriber access only You have reached the end of this Article Preview

To continue reading, subscribe now. Subscribers have full digital access.

Have something to add about this? See something we missed? Share your feedback here.

Our digital archives are a work in progress. Let us know if corrections need to be made.