Congress is currently working to reconcile competing proposals for tax reform, with the House of Representatives and the Senate both working independently to get a final bill passed by the end of the year. Senate Republicans have struggled to find ways to make their bill more palatable to middle class taxpayers, while still adding no more to the federal deficit than the $1.5 trillion allowed under their budget instructions.

Now part of their solution is to eliminate the individual mandate under the Affordable Care Act and considerably scale back the deductibility of charitable contributions. Congress would use these savings to balance out the proposed tax cuts. But those savings come at a potentially heavy cost. The Congressional Budget Office predicts that eliminating the mandate would cause healthy people to forgo insurance and eventually lead to a decrease in coverage of four million Americans by 2019 and 13 million in 2027.

ADVERTISEMENT

At the same time, both the House and the Senate’s version of the plan would double the standard deduction and repeal or scale back most itemized deductions, which would reduce the number of American taxpayers who itemize their deductions to just five percent from 30 percent, and reduce charitable giving by between $12 billion and $20 billion in 2018, based on new

estimates

from the Tax Policy Center. A second provision to repeal the estate tax could further reduce giving by another $4 billion.

Philanthropy will never be able to replace public dollars, as would be needed to provide health care to 13 million people. Organizations in the the nonprofit sector understand the positive impact of philanthropy in helping to solve our region and our country’s most persistent social problems that daily impact the lives of millions of people.

Congress could offset some of the impact to the charitable sector with the inclusion of a universal deduction, which could be claimed on top of the standard deduction by those who don’t itemize their taxes. The universal deduction provides added incentives for those who don’t itemize to continue their giving, however neither the House nor Senate bill contains a universal deduction provision.

The final tax package should also include commonsense measures to promote additional charitable giving. A proposed amendment to the Senate legislation by John Thune John Randolph ThuneGraham: GOP will confirm Trump's Supreme Court nominee before the election Tumultuous court battle upends fight for Senate What Senate Republicans have said about election-year Supreme Court vacancies MORE (R-S.D.) would allow the charitable rollover of individual retirement accounts to a donor advised fund, creating new opportunities for Americans to give. Thune’s amendment would also provide greater transparency by requiring annual reporting of aggregate fund payout rates and each provider’s dormant fund policy.

Finally, the House proposal is also attempting to use tax reform as a tool to reverse a longstanding prohibition on the politicization of charitable nonprofit and philanthropic organizations. Since 1954, the Johnson Amendment has ensured that tax exempt organizations, including charitable nonprofits, houses of worship, and foundations, do not endorse or oppose political candidates.

It protects the right of these organizations to discuss political and social issues while at the same time ensuring they are not pressured by political candidates, campaigns, and donors to take a side in divisive partisan elections. Allowing organizations such as these to become points of leverage for partisan politics and politicians would prove extraordinarily destructive, as would allowing tax exempt charitable contributions to flow from these organizations into political campaigns.

The work of Congress on reforming our tax code should not be paid for by sending more people to the food bank because they suffered a medical emergency or don’t have insurance while simultaneously shrinking the philanthropy that provides them with a safety net of last resort.

Emmett D. Carson, Ph.D., is the founding chief executive officer of Silicon Valley Community Foundation. He was chief executive officer of the Minneapolis Foundation and previously oversaw the U.S. and global grant program on philanthropy and the nonprofit sector at the Ford Foundation.