Cap on Used Goods Tax Deduction, a Disaster for Unemployed Californians! More Than 3,000 People With Disabilities Won’t Receive Services

LOS ANGELES--April 20, 2005--Surveys conducted by Goodwill Industries International (GII) and Goodwill Southern California (GSC) say that the cap will cause a major reduction in donated goods and household items to the charity, with serious consequences to those unemployed Southern Californians seeking help from the local Goodwills.

In January, the federal Joint Committee on Taxation issued a 500-page report that included a proposal to limit the tax deduction for clothing and household items donations to $500 per taxpayer, per tax year. GII, GSC and a number of other agencies oppose this recommendation because it will encourage donors to seek more lucrative ways of cleaning out their closets.

“Donated clothes and household goods provide a vital revenue stream that allows us to offer critical job development services to thousands of local residents,” said Doug Barr, GSC president and CEO. “The impact of reduced donations would be disastrous.”

Similar legislation last year limited the tax deduction individuals can take when donating a used car to a cause. After three months under the new rules, revenues from the GSC vehicle donation program are down by 30 percent.

A survey conducted by GSC through its attended donation centers and retail stores this April asked Southern Californians how the proposed cap may affect their giving. Eighty-six percent of respondents confirmed that they itemize their deductions. Seventy-six percent deduct more than $500 a year. And 58 percent said their giving would decrease if the donation cap went into effect.

A nationwide Gallup Poll commissioned by GII reported lower numbers with 50 percent of respondents itemizing deductions and 11 percent deducting $500 or more.

If just 11 percent of GSC donors (those who deduct $500 or more based on Gallup Poll findings) decided not to give because they no longer obtain the full value of their donations, Los Angeles, Riverside and San Bernardino counties would experience a $4 million cut in GSC programs.

Here’s what a loss of $4 million in retail revenue would do to GSC programs and people it helps and employs:

-- 3,082 people with disabilities and vocational disadvantages would go without help because of the cut in GSC education and job training programs;

-- 384 people with disabilities and vocational disadvantages would not find jobs because of the cut in GSC employment placement programs;

-- $11.5 million of earned wages would be lost because of the reduction in job placements (average salary estimated at $30,000);

-- 1,057 local residents would be unable to utilize the services of four GSC career resource centers;

-- Seven communities would lose Goodwill retail stores;

-- 31 program and 135 retail staff positions would be cut;

-- $4.98 million of earned wages would be lost because of this downsizing (average salary estimated at $30,000).

Among people with disabilities and vocational disadvantages who would lose an opportunity to become more productive and self-sufficient are 14 people with visual impairments; 46 people with hearing impairments; 38 people with psychotic disorders; 128 people with mental retardation; 188 people with other disabling medical conditions; 765 ex-offenders; and 28 welfare recipients.

“The cost to the taxpayer and the government in lost revenue and the decline in services we can provide, is far more than the projected savings under this proposal,” said Barr. “The cost to people with disabilities, the homeless, veterans, families in poverty, ex-offenders and many others in need is unimaginable.”

When these people gain successful employment, they pay taxes to the government as well as contribute to the society. Otherwise, the government and the taxpayers have to support these individuals and their families.

“Your sofa becomes a job-training class; your sweater helps an immigrant learn English,” said Doug Barr. “It is essential that the proposed $500 cap on charitable deductions be withdrawn!”

About Goodwill Southern California

More than 15,000 people with disabilities or vocational disadvantages benefit from Goodwill Southern California’s education, job training and placement programs annually. GSC operates 43 retail stores, 36 attended donation centers, three campuses and seven community-based career resource centers in Los Angeles, San Bernardino and Riverside counties. Charity Navigator, an independent charity evaluator, gave GSC its highest four-star ranking for four consecutive years, because GSC spends 92 percent of its budget on programs that transform lives through the power of work. For more information about GSC and its programs, visit www.goodwillsocal.org.

Contact Information

Tatiana Potts

Media Contact

Goodwill Southern California

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