October 26, 2017
With so many moving parts in the Republican tax plan that is now being hashed out in Congress, it is next to impossible to predict what the final version will look like once it finally comes to a vote. At this point, things are so fluid there are only a few certainties.
The first certainty is that tremendous pressure is on the leadership and the White House to make good on promises to overhaul tax laws, especially after the health care debacle. The second is that no matter what the final bill looks like, lots of people will complain. While the bill is incredibly complex, the overriding principles involved are relatively simple. Lawmakers can’t provide tax cuts, and reduce overall tax revenues, without also reducing overall spending.
One of the proposed changes that escaped much attention could have far-reaching impacts for religious organizations and nonprofit groups. If the bill as now proposed becomes law, humanitarian operations, churches, and groups like United Way of West Alabama and all of the agencies it serves are in the crosshairs.
The main issue is the proposed change to double the standard deduction most taxpayers take. What that will do is lead far fewer taxpayers to itemize and take a tax write-off for charitable giving. A study by the Indiana University Lilly Family School of Philanthropy found that the changes could reduce charitable giving by about 5 percent. Imagine if local churches and United Way agencies had to all cut their services by that amount. The impact felt by Alabama’s most needy would be tremendous.
Many would argue that charitable giving is done out of a sense of duty to community or out of religious conviction. Those who were going to give will give any way. But that’s not necessarily true. While faith and devotion to community are certainly the most important inspirations behind charitable donations, the tax incentive does factor in, particularly with the most wealthy and generous donors.
Because this change is one of many in the proposed Republican tax plan, and that plan is moving at warp speed by normal Capitol Hill standards, not many who would be impacted are aware of it. But ripples of concern are building already, both here in Alabama and nationally. The board of directors of the United Way of West Alabama discussed the issue this week and began an effort to contact our representatives. Meanwhile, in Utah, Mormon church leaders are beginning to mobilize. They have the ear of Sen. Orrin Hatch, a Utah Republican who chairs the powerful Senate Finance Committee.
This is an issue that may be under the radar right now. But Alabama’s congressional delegation -- Luther Strange and Richard Shelby in the Senate and Robert Aderholt, Gary Palmer, Bradley Byrne, Martha Roby, Terri Sewell, Mo Brooks and Mike Rogers in the House of Representatives -- need to remember that while we all want tax reform, we don’t want it at the expense of churches and nonprofits. There are better places to cut.