CBO Analyzes Options For Changing Tax Treatment of Charitable Contributions

Yesterday the Congressional Budget Office announced the release of a new report, Options for Changing the Tax Treatment of Charitable Giving. The report analyzes the likely impact on charitable giving of 4 options:

 Retaining the current deduction for itemizers but adding a floor.
 Allowing all taxpayers to claim the deduction, with or without a floor.
 Replacing the deduction with a nonrefundable credit for all taxpayers, equal to 25 percent of a taxpayer’s charitable donations, with or without a floor.
 Replacing the deduction with a nonrefundable credit for all taxpayers, equal to 15 percent of a taxpayer’s charitable donations, with or without a floor.

The report further refines its analysis by discussing the differential impact of these changes on individuals at different income levels.

Included in the report (at pg. 6) is a breakdown of charitable contributions currently by type of recipient and income group (based on 2005 data). This reveals that donors with annual income under $100,000 give 67% of their donations to religious organizations. Those in the $100,000 to $200,000 income bracket give 57% to religious causes.  Those earning $200,000 to $1 million give 23% to religious organizations. Those earning over $1 million give 17% to religious organizations. [Thanks to Steven H. Sholk for the lead.]