To the editor:
Comprehensive tax reform discussions are nearing an end, with a final vote by the House and Senate expected next week. Unfortunately, versions of this legislation already passed by both chambers would cause significant reductions in charitable giving.
Despite technically preserving the "charitable deduction," 31 million taxpayers who currently claim the deduction will lose it, according to the Joint Committee on Taxation. Indiana University's School on Philanthropy found fundamental changes to the standard deduction would cause $13 billion in lost private donations to charities. That is a 5 percent decrease in overall giving, but the losses will be concentrated in faith-based, basic needs and disaster relief charities that rely on gifts from middle-class donors.
In Minnesota, a 5 percent loss resulting from tax reform would mean $184 million less to fund food banks, homeless or domestic violence shelters, provide day care or job training, or any of the services provided to our communities by local nonprofit organizations. Our tight budgets mean lost dollars translate directly to reduced services for our communities.
The charitable deduction has existed for 100 years and been studied by economists and tax experts for decades. While individuals give for a variety of reasons, to include our country's long standing philanthropic tradition, there is empirical and anecdotal consensus that, on aggregate, tax incentives significantly increase giving from people at all income levels. Arguments that tax reform will result in increased giving, absent a charitable deduction, are not supported by any economic data or our experience in the charitable sector.
If tax reform in its current form is enacted, 95 percent of donors to charity will be taxed on their donations. Only the wealthiest donors — important donors to be sure — will be able to make tax exempt donations. But that result is inconsistent with our nation's principles and deeply unfair to the 95 percent whose gifts should be valued just as much.
Unfortunately, we've run out of options to fix the tax bill in a way that would mitigate the damage done to charities and relieve almost all taxpayers from paying taxes on money they donate to charity.
Therefore, in a rare move for our organizations, United Way of Goodhue, Wabasha and Pierce Counties along with United Way Worldwide, Hope Coalition, Hispanic Outreach of Goodhue County, Red Wing Youth Outreach and ArtReach must oppose the current tax reform bill — the Tax Cuts and Jobs Act. We hope that Rep. Jason Lewis will too.
Maureen Nelson — executive director, United Way of Goodhue, Wabasha and Pierce Counties
Kris Kvols — executive director, Hope Coalition
Lucy Richardson — executive director, Hispanic Outreach of Goodhue County
Mandy Arden — executive director, Red Wing Youth Outreach
Anna Ostendorf — program coordinator, ArtReach