Scenario I maintains current law and allows only
itemizers to take advantage of the credit, while Scenario 2 extends the credit to the charitable donations by taxpayers who do not itemize deductions.
Those in that category would be expected to be more informed and better able to take advantage of the incentive's full value compared to those who do not use it (those who take the standard deduction or
itemizers who do not give to charity for other reasons).
The Panel believes that current law, with its arguably lavish provisions (multiple homes and million-dollar mortgages) that provide tax benefits disproportionately to high-income
itemizers, may have strayed from the original intent.
The provision that allowed
itemizers to deduct charitable contributions expired in 1987, and nonitemizers could no longer deduct any charitable contributions, though recent discussions on Capitol Hill have raised the possibility of reinstating the nonitemizer charitable deduction.
The lack of tax return information and/or information on
itemizer status is a weakness of the sample.
The proportion of
itemizers were found to be greater in the Northeast when compared to the respective
itemizer proportions in the South and Midwest.
The increase in
itemizers allowed for an analysis of donor demographics.
are indexed for inflation, "standard deduction creep" eliminated the conversion of nonitemizers to
itemizers caused by inflation.
For an
itemizer at the federal level, the tax price of a deductible tax is one minus the federal marginal tax rate.
There would be no floor on deductions for
itemizers, which had been proposed to be $210.
