The Charitable Deduction and Civic Engagement

<p>Nonprofits have been pushing for a universal charitable deduction for years. The CARES Act created <a href="https://www.thenonprofittimes.com/regulation/universal-deduction-nonprofit-loans-grants-in-stimulus/" rel="noopener noreferrer" target="_blank">a temporary tax deduction for charitable gifts up to $300 for single or married filers in 2020</a>. Congress extended that into 2021 and increased the deduction to $600 for married couples.</p> <p>Two professors at the University of Virginia propose a tax subsidy to increase civic engagement in a time of income inequality and political polarization. In their paper, <a href="https://media.thenonprofittimes.com/wp-content/uploads/2021/10/18142113/Charitable-deduction-and-civic-engagement.pdf" rel="noopener noreferrer" target="_blank"><em>The Charitable Tax Deduction and Civic Engagement</em></a>, Andrew Hayashi and Justin Hopkins propose that all taxpayers with adjusted gross income (AGI) less than the national median would get the Community Contribution Credit. Hayashi is <a href="https://www.law.virginia.edu/faculty/profile/ath9f/2458252" rel="noopener noreferrer" target="_blank">a professor at the University of Virginia School of Law</a> and&nbsp;Hopkins is <a href="https://www.darden.virginia.edu/faculty-research/directory/justin-j-hopkins" rel="noopener noreferrer" target="_blank">a professor at the University of Virginia’s Darden School of Business</a>.</p> <p>The refundable tax credit would be equal to 90% of their contributions, capped at $500. It would apply for donations to 501(c)(3) nonprofits -- but also 501(c)(4) social welfare organizations, which currently are not eligible for deductible contributions. In 2018, the most recent year for which data are available, the <a href="https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-glance" rel="noopener noreferrer" target="_blank">national median AGI was $43,614</a>. That year, 87.4% of taxpayers claimed the standard deduction while 11.4% of taxpayers claimed itemized deductions.</p> <p>"We're tryin