The deduction, which lets people who claim the standard deduction also claim a charitable contribution deduction of up to $300 for 2020, will cost around $2 billion and do little to encourage charitable giving, Penn Wharton Budget Model found in its report. It would likely increase charitable giving by $110 million in 2020, a 0.03% increase from the projected $320 billion expected this year, Penn Wharton found.
The $2 billion hit to revenue would mostly derive from taxpayers who previously itemized their taxes, opting instead to take the standard deduction for 2020 in light of the modified tax break, Penn Wharton found. Around half of the benefits of the break would go to the upper middle class, according to the report.
Penn Wharton also released separate data on Friday on the rebate provision of the legislation, finding that people in the bottom quintile of the income ladder would see a 46.2% increase in after-tax income. Under certain income thresholds, the legislation provides single people with a $1,200 COVID-19 relief rebate and couples with a $2,400 rebate, plus $500 for each qualifying child.
Trump on Friday signed H.R. 748, the Coronavirus Aid, Relief and Economic Security Act, a $2 trillion relief package to help families and businesses with the economic fallout of the novel coronavirus pandemic.
--Editing by Vincent Sherry.
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