The mission of the American Red Cross is to prevent and alleviate human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors. The generosity of the American public is fundamental to our ability to be there, every day, for people facing emergencies.
But the tax reform plans in Congress could hurt charitable giving — possibly to the tune of $95 billion — and the ability of the Red Cross to provide help and hope during emergencies. This is true of the bill recently passed by the House of Representatives and the one the Senate is expected to vote on soon.
The charitable tax deduction remains in place in both bills, but at the same time the bills remove the incentive for charitable giving for the vast majority of taxpayers.
The bills do that by doubling the standard deduction — from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married filing jointly. The expected result is that the estimated number of taxpayers who itemize would fall from 30 percent to 5 percent. Ninety-five percent of taxpayers would no longer have the incentive.
If the House bill is enacted, it’s estimated that 9.4 million taxpayers who itemize will deduct charitable contributions totaling $146.3 billion, down precipitously from 40.7 million who would have deducted $241.1 billion in charitable contributions under current law, according to a Joint Committee on Taxation memo. The difference is a staggering $95 billion.
In my role as chair of the American Red Cross Northern and Eastern Maine Chapter Board of Directors, I have a front-row seat to see all our organization accomplishes, thanks to our network of volunteers, donors and partners.
In our most recent fiscal year, the Red Cross in Maine responded to 295 in-state disasters, assisting 1,025 individuals; collected 51,018 units of blood for patients and people who have been in accidents; installed 3,194 free smoke alarms in homes; helped more than 980 Maine service members, veterans and their families; and empowered 19,009 Maine residents through lifesaving health, safety and preparedness education and skills training, such as first aid, CPR, water safety and babysitter training.
Red Crossers from Maine have deployed more than 117 times in the last three months for a string of unprecedented disasters: back-to-back hurricanes, wildfires and mass shootings. All the while, we continue to serve the people of Maine. We responded to home fires, made families safer through the installation of free smoke alarms and fire education, set up seven shelters after the recent windstorm knocked out power to nearly a half-million homes and businesses and more.
We are able to do this work because of the generosity of the American public — not the federal government.
A fair solution is a “universal” charitable tax deduction that expands the opportunity to take advantage of this giving incentive.
Instead of passing legislation that is detrimental to charitable giving, Congress has the opportunity to increase the number of people who donate and the amount they give to charitable organizations. In fact, a universal tax deduction applied to all charitable giving could produce an annual net gain in total giving up to $4.8 billion, according to research by the Indiana University Lilly Family School of Philanthropy.
The charitable tax deduction should be available to all taxpayers, regardless of income or whether they itemize.
Gordon Stitham is the chair of the American Red Cross Northern and Eastern Maine Chapter Board of Directors. He lives in Orrington.
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