by Howard Husock
January 27, 2014
The ongoing debate over tax reform, including efforts to curb itemized deductions taken by individuals to lower their taxable income, could result in changes to the tax code that blunt charitable giving throughout the country. Little understood in the debate is that the most serious consequences to the flow of donations could well occur in the so-called Blue States. This paper examines how proposed changes in the tax code could affect charitable giving, particularly by high-net-worth households. It builds on work showing that a lower-valued charitable deduction will reduce giving. It highlights the likelihood that various proposed tax-code changes would have different regional effects tied to differences in state and local tax rates and mortgage-interest costs. Finally, this paper reflects upon whether, and how, changes in the tax laws should include the explicit goal of not reducing overall charitable giving.