Paulsen Bill Spurs Charitable Giving, Creates Tax-Advantaged “Flexible Giving Accounts”

WASHINGTONCongressman Erik Paulsen (MN-03) has introduced bipartisan legislation that incentivizes philanthropy by creating “Flexible Giving Accounts”, which enable taxpayers to set aside portions of their pre-tax paycheck to give to charities. Similar to Health Savings Accounts, FGAs will allow taxpayers to support qualified charities of their choice tax-free. Employers will be able to offer employees the opportunity to divert a portion of their pre-tax earnings into the FGA as part of their fringe benefits package. Taxpayers may then distribute those dollars to charitable organizations.

Paulsen introduced the legislation with Reps. Ami Bera (D-CA), Mike Gallagher (R-WI), Cheri Bustos (D-IL), Mark Pocan (D-WI) and Tim Walberg (R-MI).

Currently, most American taxpayers take the standard deduction rather than itemize. The result is that most Americans see no real tax benefit from their charitable giving. The new accounts would allow the millions of taxpayers who do not itemize to receive a tax deduction.

“Americans are the most generous charitable givers on the planet, and philanthropy is the lifeblood of countless non-profit groups that do vital work in Minnesota. But the majority of taxpayers who don’t itemize their deductions see no tax benefit from their giving,” said Congressman Paulsen. “Flexible Giving Accounts will be game-changers. They’ll spur more giving by making it easier for American families to make regular contributions to charities of their choice and will mean less paperwork for taxpayers.”

“Every day in this country, charities are changing lives and improving communities,” said Congressman Gallagher, a co-sponsor of the bill. “By empowering more Americans to set aside their hard-earned money each month, tax free, for charitable giving, this bipartisan bill would incentivize a culture of everyday philanthropy that in turn would deepen and diversify the country’s giving pool.” He continued, “Flexible Giving Accounts are an opportunity for Americans to invest in their own neighbors and communities, and one we should take full advantage of for the good of the country.” 

Paulsen’s bill was introduced with the support of five other members of both parties. Paulsen is a member of the House Ways and Means Committee, the chamber’s tax-writing panel. The text of the legislation, H.R. 6616, can be viewed here.