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Charitable Giving

More, not Less



Should the government encourage or discourage charitable giving? It’s not a trick question.

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Chuck  Colson

With a federal deficit of nearly $1.6 trillion a year and a national debt of about $15 trillion, the government is scrounging for every dollar it can find. So, no surprise, President Obama’s jobs plan seeks to eliminate so-called “tax loopholes.” And it should.

I’ve said many times that we’ve got to end corporate welfare and loopholes (like the ethanol deduction). These cost the Treasury billions and they help only the privileged interests who can hire lobbyists.

But tucked inside the President’s jobs plan, which failed to pass Congress, but the President will be re-submitting it bit by bit, is a provision capping charitable deductions for wealthy tax payers.

That’s a loophole? Now, we Christians believe that everyone needs to pay their fair share of taxes, and, in these hard economic times, all of us need to bite the bullet and make sacrifices. Are we therefore being hypocritical to fight limiting charitable deductions? I don’t believe we are.

For one thing, allowing charitable deductions to religious organizations in particular recognizes the separation of church and state and freedom of religion. But secondly, limiting the charitable deduction, even for so-called “millionaires and billionaires,” makes no economic sense.

Charities, especially religious charities, provide services that the government won’t or can’t do efficiently. The Internal Revenue Service says that individuals claimed nearly $34.9 billion in charitable deductions on their federal tax returns in 2009. But what does the government get in return? Look just at what Catholic Charities does for AIDS victims, or for the savings religious schools provide municipalities. Or the services provided by homeless shelters, prison ministries (like Prison Fellowship), medical research, and on and on.

Proponents say that reducing the tax deductibility of charitable giving among the wealthy won’t really hurt nonprofits. But the top 2 percent of earners gave a third of all charitable contributions in 2008.  And while no one can predict with certainty what might happen, an organization called the Independent Sector says the limiting deductions might cost $7 billion in donations every year.

Having said all that, there may be legitimate ways of rooting out abuses, which can occur sometimes with private foundations, and limiting deduction to charities that claim no religious purpose and provide no public benefit. But this one-size fits all approach that we’re trying now won’t work.

Now, don’t expect the idea of limiting charitable tax deductions to go away. The Administration first attempted to do this back in 2009, and again in its 2012 budget.

But as Christianity Today has written, “Governments should expand incentives for Americans to give ever more generously to charitable groups.” CT adds, “[W]hen charities deliver services, they get more bang for the buck than government programs . . . Nonprofits are not only more efficient in themselves, but charitable donations leverage no small amount of volunteer time.” I can attest to that, because that’s the case with thousands of Prison Fellowship volunteers.

Folks, given our struggling economy, this would be an especially bad time to deprive nonprofits of the resources needed to help our communities. Keep your eyes peeled: Whenever the idea pops up again—and believe me, it will — don’t be afraid to tell your congress person that in times like these, we need more charitable giving, not less.

Further Reading and Information
The Charitable Deduction

Independent Sector

Don't be charitable about president's jobs bill

Craig D. Eyermann | South Bend Tribune | October 10, 2011

More Giving, Less Taxing
Editors | Christianity Today | May 14, 2009

 




Comments:

Charitable giving
There once was a bumper sticker which stated that the government hated organized crime because they couldn't stand the competition. One wonders if the same envy is behind the move to discourage charitable giving.
Charitable Giving
America is the only country in the world, that I am aware of, where you are given tax credit for your tithes and offerings. What happened to "give unto Caesar what is Caesar's ...?" If the church's income might dry up if our tax deduction is abolished, we are in more serious spiritual trouble than we realize!
Wealthy folks: yes a lower deduction limit is wron
If you are wealthy, likely you have a tax accountant. Who will clearly point out to you that there (assuming it becomes law) is now a new limit to your deductions for giving.

But, this is where conviction will have to overcome "tax sense", at the expense of your accountant's good advice. He/Her is doing right to point out this limit, but as a person of conviction, do a greater right, give the same or more with your giving, despite the lack of deduction.

Most likely there was a time when you had very little to give compared to now. But you gave anyway, and it "cost" you more then. And, the Lord's blessings you enjoy now may be tied to your greater faith then.

Remember that faith, and, while you need to try to correct tax code, don't let it, or your accountant trump your generous hearts!




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