U.S. lawmakers are considering changes to the tax deductibility of charitable contributions, scrutinizing a benefit that is expected to allow 38.7 million households to claim a deduction for 2012.
Some possible changes would include imposing a dollar cap on all itemized deductions, limiting the tax rate at which contributions can be deducted and replacing the deduction with a credit.
This deductible is 96-years old and has come over scrutiny as lawmakers in both parties look for ways to broaden the tax base: either to lower rates or reduce the budget deficit. President Obama has proposed limiting the deduction’s benefit for those in the top three tax brackets.
The critics of the charitable tax break note that it benefits only one-third of taxpayers who itemize their deductions, particularly those with the highest incomes who can donate the most.
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