On March 13, 2002, the research arm of Congress, the Congressional Research Service (CRS), released an analysis of legislative proposals to deduct charitable contributions for those who do not itemize their taxes. Based on the economic effect of the deduction, they conclude that, "the impact of the proposed deduction on charitable giving is likely to be relatively small…" CRS levels other criticisms of the non-itemizer deduction, but also offers three approaches to improving the proposals pending in Congress. The table below summarizes the CRS findings. Summary of Congressional Research Service Non-Itemizer Analysis   H.R. 7 S. 1924 Deduction Starting at $25 single/$50 joint and rising to $100/$200 in 2010 $400 single/ $800 joint Amount Deducted for an Individual in the 10%/15% tax bracket $2.50/$3.75 to start, rising to $10/$15 in 2010 $40/$60 Cost $6.4 billion* $8 billion ($40+ billion)** New Giving 3 cents for every $1 of lost govt revenue 12 cents for every $1 of lost govt revenue Giving Outside of Religious Sacramental Services 1-2 cents for every $1 of lost govt revenue 6 cents for every $1 of lost govt revenue * When fully phased in, it costs $1.3 billion/yr. according to the Joint Committee on Taxation. ** There are no official cost estimates. It is expected to cost a little over $4 billion/yr. The deduction would be permitted for 2 years, but would probably be extended beyond that. The CRS report analyses the non-itemizer deduction in the House passed bill (H.R. 7), in the Santorum-Lieberman compromise faith-based bill (S. 1924), and in the Clinton-proposed version that would put a floor on the deduction at $500 (meaning an individual would have to give $501 before receiving a tax deduction). The report only looks at the economic effects of the deduction, not the societal impacts. It also addresses how much low-income households would benefit, since, according the Joint Committee on Taxation, the purpose of the incentive is "to provide funds to charitable organizations, many of which will perform activities that otherwise would have to be performed by the Federal Government." The non-itemizer deduction in the Santorum-Lieberman bill would allow non-itemizers to deduct up to $400 in charitable contributions for single filers, and $800 for joint filers. In this version, there is no threshold that would have to be reached before the deduction becomes available. The CRS study found that this form of the deduction would only generate 12 cents of new giving for every dollar of lost tax revenue, a significantly lower figure than the $1.15 in new giving identified by Independent Sector. The report raises the question of whether direct government funding of low-income programs would be a more efficient way to target resources to them. The report emphasizes the likely distribution of new giving between religious and non-religious groups, since religious groups currently receive 73% of donations from non-itemizers (as opposed to 36.5% of overall donations). This is far larger than any other segment in the charitable sector. If this giving pattern were to remain the same with the non-itemizer in place, the study finds that low-income programs would receive little benefit, since 70% of donations to religious organizations go for sacramental and similar services to members. CRS notes that overall, only 6% of giving to religious groups benefits poor individuals, and "no more than 10% of all charitable giving directly benefits the poor." CRS examines alternatives and their potential impacts. For example, if non-itemizers could only deduct donations over a $500 floor amount ($1000 for joint filers), and there were no ceiling on the amount that could be deducted, "we estimate that each dollar of revenue loss will induce 64 cents of giving (and 32 cents if religious services were excluded)." Another alternative is to have a floor as a percentage of income, and "initial results suggest that this approach would be considerably more effective per dollar of revenue." For example, for households in the $12,000-$24,000 income range, this approach would result in 81 cents in new giving per dollar of lost revenue, and in the $24,000-$36,000 income range the results would be $1.04 in new giving per dollar of lost revenue. The report notes, "The third option is to use the revenue that would have been directed at the tax cut to fund spending programs aimed at the same objective, either through direct government program or a grant that might be administered by a private entity." The full CRS report is available on OMB Watch's website. For details on the provisions of S. 1924 see this OMB Watch summary. Also see OMB Watch’s analysis on the nonitemizer deduction for more information.