By lowering the after-tax cost of donating to charities, the deduction provides an incentive for such donations. Only taxpayers who itemize their deductions (less than 25 percent of all taxpayers in 2016) can benefit from this provision in the tax code. The number of itemizers is projected to decline by 60 percent after the 2017 tax cuts. In 2016, donations accounted for 3 percent of Adjusted Gross Income (AGI) — the term for taxable income when determining one’s taxes). This means that without the ability to deduct charitable donations, fewer people will itemize on their taxes (more will use the 1040 EZ)Instructions:Please consider the following proposal for changing taxes. Please provide an analysis of this proposal. First explain what you consider to be the advantages and disadvantages of enacting this measure. What are some reasons why it would be a good idea to enact this? Are there any drawbacks or reasons why you would not want to enact this? What is your response to the analyses posted by your fellow group members?At the end of the discussion, you will be asked for your final vote on this proposal. You will vote “yes” to enact it, and “no” if you do not wish to enact it and WHY???Proposal: Limit the tax deduction for charitable contributions.Limit the tax deduction for charitable contributions. This option would limit the deduction for charitable donations — while still preserving a tax incentive — by allowing taxpayers to deduct only contributions that exceed 2 percent of their AGI. The CBO estimates that this would likely reduce contributions among those giving less than 2 percent of their incomes but would probably not reduce contributions of those donating above 2 percent by very much. (ie the very rich will still give)Basically, this proposal would not allow you to deduct your gifts to charity from your taxes, unless you gave so much it exceeded 2% of your taxable income. If you made $50,000 a year, you would need to donate at least a $1000 for it to count as a deduction.Effect on deficit: -$176 billion.Supporters Say:A significant share of donations to charity would be made even without allowing taxpayers to deduct contributions. Allowing taxpayers to deduct contributions is economically inefficient because it results in a large subsidy( tax break) for a very small increase in charitable giving. ie Charities get a little, but government revenue loses out.Smaller contributions are apt to be a source of abuse among taxpayers, some of whom overstate their charitable (they use it to fudge their taxes)Opponents Say: Total charitable giving would still decline. Without a tax incentive, smaller donors would reduce their contributions and eventually the federal government may need to financially support struggling institutions.This option encourages taxpayers to lump their donations together in one tax year to qualify for the deduction instead of spreading the gifts over several years.Charities would be left strugglingWhat do you say? Should the US limit the tax deduction for charitable contributions? Why or why not?