Tax Proposal Could Squeeze Charities

The shoppers browsing through the Goodwill and Salvation Army thrift stores are hunting a good bargain for clothes, furniture and household appliances that are all donated.

Goodwill's CEO, Leroy Modenbach says, "That's what we have to sell and generate the income. We don't get a whole lot of donated money."

Modenbach is afraid donations will dry up if Congress caps tax deductions to $500 a year.

"It would discourage the large donations, which frankly help us to continue to pay our workers."

The charities we talked to say there are already laws in place regulating the amount of donations you can take off your taxes. And the IRS requires you to fill out forms if the item you're giving up is valued at $500 or more.

Major Darrell Kingsbury of the Salvation Army says, "Most folks who come bring a bag here, a box there, maybe a couple of bags, a couple of boxes. Spring cleaning, there might be a little more, but it would be $500 very quickly from most folks who bring on a regular basis. So that would have a serious impact."

Modenbach and Kingsbury say they find most people underestimate the value of the things they pass along.

"Not all of them are looking for tax receipts. Those who do, they use them some. But we've had very few times where folks have come back to us or, 'Gee, the IRS has a question' or 'I need a copy for my taxes'. My folks give out of generosity," Kingsbury says.

The two men say donors might feel less generous if Congress puts a tighter squeeze on the dollar amount they can trim from their taxes.

by Marcia Hill