231 in House Reportedly Reject Killing Short-Form Deduction for Charity Gifts

More than half the members of the House of Representatives are co-sponsoring a bill that would block President Reagan’s plan to repeal the charity deduction for those who use the short tax form and do not itemize their deductions, it was reported Monday.

Retaining the deduction is essential to ensure that charities continue to receive donations from a majority of taxpayers, witnesses representing colleges, museums, medical research, the arts and veterans told the House Ways and Means Committee.

“The provisions on charitable contributions in the tax bill (that Reagan recommended to Congress) are dangerous to our society . . . “ said Jean Mayer, president of Tufts University and chairman of the New England Board of Higher Education.

“America’s position in the world rests less on our military power than on the educated brains of our people and our reputation as a just, caring and effective society,” Mayer said.

Tougher Minimum Tax

Reagan’s plan to make major changes in the federal income tax includes two provisions of special importance to charities. One would reduce the tax incentive for large gifts by wealthy Americans by making a share of some property contributions subject to a tougher minimum tax.

The other would repeal the write-off for donations by the 63% of taxpayers who do not itemize deductions.

Rep. Harold E. Ford (D-Tenn.), who was chairman of Monday’s hearing, has introduced a bill to make that deduction permanent.

Jack Moskowitz, senior vice president of United Way of America, told the committee that 231 House members--a majority--including 17 members of the Ways and Means panel, have signed the bill. The House has 435 members.

“Failure to make the non-itemizer deduction permanent would result in forcing the charities to look to the rich for support,” Moskowitz said. That, in turn, would make it impossible for public charities to keep up with the demand for services at a time when the federal government is reducing its role, he added.

A 1981 law allows persons who do not itemize deductions to write off a share of their contributions. This year, the law will permit such persons to deduct half of their donations. In 1986, there will be no limit. The law is due to expire after 1986.

Reagan wants to repeal the deduction at the end of this year on the ground that it complicates the tax system and that it is very difficult for the Internal Revenue Service to police against cheating.

Could Lose $6.5 Billion

Repeal would save the government about $3 billion in 1986 and 1987, but surveys indicate that it would cost charities as much as $6.5 billion a year in lost donations.

Brian O’Connell, president of Independent Sector, an organization of 625 charities, corporations and foundations interested in volunteer service, testified that, under the President’s proposal, “contributions in 1986 to carry out services provided by charities would be reduced by about 17%, or $11 billion, over what would be the case under the current law.”

That includes losses resulting from repeal of the non-itemizer deduction, from subjecting some donations by upper-income persons to the minimum tax and from the fact that Reagan’s program would reduce tax rates for most businesses and individuals.

Cutting rates makes deductions for charitable contributions less advantageous for the donor.