June 27, 2018

Bloomberg BNA: Fix’ for Federal Cap on State Tax Deduction? K-12 Tax Credits

media mention

But the very same charge can be made against the tax credit programs for private K-12 schools, the Institute on Taxation and Economic Policy said in its report. These programs are now being openly promoted by tax advisers and accountants as a way to sidestep or circumvent the SALT deduction cap, according to ITEP.

“In Alabama, Arizona, Georgia, Louisiana, and Pennsylvania, these tax credits are being publicly marketed to potential donors as ways to ‘convert’ or ‘exchange’ capped SALT deductions for uncapped and more lucrative charitable deductions,” the ITEP report said.

Many donors who act on this advice are able to come out ahead on the deal, receiving more back in the form of state credits and federal charitable deductions than they donate, the report said.

“In other words, these tax credits are being used by taxpayers to generate federal charitable deductions for behavior that meets virtually nobody’s definition of genuine charity,” it said. Read more