Tax Changes-Maybe

Do you think the proposed changes to the tax law will affect contributions – and dues/annual commitments – to synagogues?

Probably not.

In 2016, U.S. taxpayers earning between $50,000 and $75,000 in Adjusted Gross Income (“AGI”) averaged $2,970 in charitable contributions.

For those earning income between $75,000 and $100,000 AGI, average contributions were $3,356.

Those earning between $100,000 and $200,000 averaged $4,130 in charitable contributions.

And for those earning between $200,000 and $500,000 AGI, charitable contributions averaged $7,426.

There is of course no way to know this, but I will bet the income categories described above cover more than 90% of synagogue members.

President Trump’s proposed changes really focus on lowering the tax rates. Regarding charitable deductions, he is proposing to limit total deductions to $100,000 for individuals and $200,000 for couples. The proposal from the House of Representatives limits deductions to just mortgage interest and charitable deductions.

As an aside, today I read an interview with Steve Ballmer, the former CEO of Microsoft. He is funding a project to track all government spending. He felt that deductions for employer provided health insurance, state and local taxes or mortgage interest deductions are really subsidies for the affluent.

For another day.

Currently, there is no limit on overall deductions, but a person can only deduct charitable deductions up to 50% of their adjusted gross income. The “1%” that is always talked about, those at the very top of the income pyramid, in theory, might have some disincentive regarding charitable donations due to such limits.  But I think they contribute because they are asked and because they want to.

“Donative intent” remains the most important reason why a person makes a contribution. At all levels of giving. Regarding the synagogue, people make a contribution for a host of reasons, mainly because they are obligated to fulfill their dues/annual commitments. And hopefully, they believe in their hearts and in their heads that the synagogue is important to them as an institution is meaningful in their lives.

Don’t get me wrong. Deductibility of charitable contributions is certainly helpful to those who itemize their tax returns. If the tax code was to change so that contributions were no longer deductible it would certainly have some effect on contributions.

But let’s not be so concerned about this hypothetical situation. Churches and synagogues, hospitals, colleges and universities as well as human service organizations, and their representative advocacy and lobby organizations, would fight this tooth and nail.

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