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Ways and Means Weighs Impact of Charitable Contributions on Exempt Organizations

February 22, 2013—The House Ways and Means Committee held a Feb. 14 “stakeholders” hearing on tax reform and charitable contributions. Much of the hearing focused on hospitals, universities, and the impact of itemized deductions for charitable contributions to non-profit institutions.

In his opening statement, full-committee Chair Dave Camp (R-Mich.) outlined recent examples of “different ways that the tax code might be changed that could affect the charitable community and the valuable services it provides,” including:

  • limiting the tax rate against which contributions may be deducted;
  • imposing a dollar cap on total itemized deductions;
  • establishing a floor below which contributions may not be deducted; and
  • replacing the deduction with a tax credit available regardless of whether the taxpayer itemizes.

Ranking Member Sandy Levin (D-Mich.) used his opening remarks to criticize Republican proposals to reduce the top marginal tax rate and to cut loopholes by “acting on the largest deductions and credits, which includes the charitable deduction.” Rep. Levin also noted the “deduction limitations in place for the very wealthiest Americans — through the so-called Pease provision that was reinstated during the action that Congress took on New Year’s Day to avoid the fiscal cliff.”

Witnesses included Mark Huddleston, president, University of New Hampshire, on behalf of the American Council on Education (ACE) and several other higher education associations and Pamela King Sams, executive vice president for development, Children’s National Medical Center, on behalf of the American Hospital Association (AHA).

Huddleston stated, “Since it was enacted in 1917, the charitable deduction has encouraged and delivered vital private support for higher education, support that otherwise would have required even higher levels of direct public expenditure.” He continued, “Charitable gifts [to colleges and universities] advance scholarship, propel groundbreaking research, and promote technological innovations that drive the nation's economy. Most important, charitable gifts make higher education more accessible and affordable for our students.”

Sams urged the committee “to continue to encourage private giving to the hospitals,” and to “exclude charitable giving from any limitations on the deductions and maintain the existing federal charity deduction.” She also noted that “the benefits to our communities greatly exceed the revenue that the federal government foregoes by granting tax exempt status to hospitals.”

The day before the hearing, Chairman Camp and Ranking Member Levin announced the formation of 11 separate Ways and Means tax reform working groups.  Each group will be led by a Republican chair and Democrat vice chair and will “review current law in its designated issue area and then identify, research, and compile feedback.” Reps. David Reichert (R-Wash.) and John Lewis (D-Ga.) will lead the “charitable deductions/exempt organizations” working group.

Chairman Camp Feb. 15 announced the Republican membership of the Ways and Means subcommittees.  Rep. Kevin Brady (R-Texas) will service as chair of the Subcommittee on Health.

Contact:

Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116
Email: mshick@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org