Trump’s budget threatens charitable giving

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Last month, President Trump presented to the American people his budget priorities for the upcoming year. And while it is the exception and not the rule that any presidential budget gets adopted, it is still an important document. The proposal gives insights into the policy priorities that the administration has for the coming year.

And it’s clear that this administration is serious about cutting spending, or at least requiring some sense of return on the taxpayer investment. Seven federal level departments are proposed to have their funding cut by 10 percent. The budget calls for the elimination or to end federal support of the Appalachian Regional Commission, the Corporation for National and Community Service and the Neighborhood Revitalization Corporation, just to name a few. Lon- standing federal programs such as the Community Development Block Grant program and the Supplemental Nutrition Assistance Program are also faced with large cuts as well.

And federal spending is becoming more and more of an issue with everyday Americans. It’s hard to level that as our federal government consistently deficit spends and our overall national debt goes higher and higher, there will not be consequences to these actions.

The president’s proposed action is met with applause by some, derision by others. Such a reaction is expected any time there is a change or challenge to the status quo. Allies and foes alike are soon to voice their opinions.

But perhaps it is the president’s tax policy that is more concerting. Right now, consisting of nothing more than a couple pages of broad principals, the president also wants to make big changes in our federal tax policy. No one would agree our current tax policy works for anyone (except maybe accountants) and change is needed. Our tax policy is filled with more exceptions than rules and making sense of this senseless system is sorely needed.

However, some of the president’s a few segments of his proposed tax policy are ones which can damaging effects across the country — particularly as he raises the standard deduction and lowers the marginal tax rate for the highest earners.

In research completed by the Lilly Family School of Philanthropy at Indiana University, economists discovered that increasing the standard deduction and lowering the marginal tax rate for those highest earners would have a dramatic effect on charitable giving. The university estimates that the charitable sector would lose anywhere from $4.9 billion to $13.1 billion; this roughly equates to 2 to 5 percent of all charitable donations. And while charitable organizations lose billions of dollars, the effect on the federal budget was seen as negligible; federal revenues are expected to decrease by 0.5 percent if the measures were enacted.

Taken the president’s proposed budget, which by many reports reduces the federal safety net, and the tax policy, which puts charitable organizations at a competitive disadvantage, this could spell significant difficulties for the non-profit sector. And that is simply disappointing.

We can have a healthy debate on the breadth and depth of government providing a safety net. Yet it’s hard to argue that a safety net should not exist. It’s in those gaps, where local churches, houses of worship and non-profit organizations fill that gap between what people need and what government can effectively provide.

And while it may be appropriate for the charitable sector to serve more individuals, it makes operating these charities more difficult when the incentives to give, through tax policy, are significantly reduced.

If there is one aspect of American society that makes it truly unique, it’s our ability and desire to be generous. I would argue we live in one of the most generous communities in one of the most generous countries in the world. Community festivals, GoFundMe pages, benefit dinners — all of these are designed with one thing in mind: to help the least among us.

And generosity affects all of us. We have all drank water from a well we did not dig, we all learned in a school we did not build, we will all be buried in a hole we will not dig.

To steal a line from our president, generosity can help “Make America Great Again.” I just hope he realizes that fact.

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William “Bill” Lutz

Contributing Columnist

William “Bill” Lutz is executive director of The New Path Inc. He can be reached at [email protected].

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