Congress and President Donald Trump hope to pass sweeping tax reform, and House Speaker Paul Ryan said Wednesday that he hopes to have a bill ready for Trump to sign before the Dec. 23 congressional recess.
Give us tax reform, and give it to us soon. Just be careful to protect the country's private-sector safety net while doing so.
Soak-the-rich types are pressuring lawmakers to reduce the charitable donations deduction, which cynics characterize as a loophole for wealthy donors.
President Barack Obama tried and failed to reduce the top charitable deduction of $39.60 for each $100 donation to $28. He was opposed by the rich, poor, Republicans and Democrats. When people can afford to give, everyone benefits.
This year is the 100th anniversary of Congress enacting the charitable deduction, and it is no time for the federal government to reduce the incentive to give.
Locally, a reduced cap on charitable deductions could result in lost jobs. Colorado Springs serves as a major hub for nonprofit headquarters, as host to everything from the National Dog Mill Rescue, to Compassion International, to Orphans Tree, to Angels of America's Fallen and more. Nonprofits rank favorably among the military, and tourism is a principle component of our local economy.
Beyond Colorado Springs, a disincentive to give could wreak havoc on the sick and poor.
We can't determine exactly how much of each tax dollar intended to help the poor escapes Washington's notoriously high bureaucratic overhead machine. The worst estimates say about 30 cents of each tax dollar levied to help the poor gets to the intended recipients. That is likely an exaggeration, but we know the federal government makes inefficient use of dollars collected for aid.
Charities, by contrast, deliver about 70 percent of donations on average to the people they are trying to help.
Former President Bill Clinton knew this and tried to fix it. He created Charitable Choice because he was so concerned about inefficiency in doling out federal assistance.
Charitable Choice allowed the government to channel federal aid through more efficient nonprofits, including overtly religious charities. Clinton's successor, President George W. Bush, expanded the program and established the White House Office of Faith Based and Community Initiatives.
The Gazette editorial board recently spoke with U.S. Rep. Doug Lamborn, R-Colorado Springs, about the potential of tax reform lowering the charitable deduction.
"We need to leave it the way it is," Lamborn said, explaining he would oppose efforts to reduce charitable deductions.
We hope other members of Colorado's congressional delegation will work to preserve tax deductions for giving.
Advocates argue a reduction in the charitable tax incentive would raise more money to fund government, facilitating more tax breaks for people in middle-and lower-income brackets. Even if that's true, the move would create voids in the social safety network that would have to be filled by government. As explained, government would meet these needs with far less efficiency.
Nonprofits ease suffering and assist those who want to better their lives. They also help animals, trees, fish and wildlife. They are a staple of the American way of life.
Fix the tax code, but don't jeopardize important philanthropy and efficient work by thousands of nonprofits that help millions of less fortunate to survive and succeed.
REPRINTED FROM THE COLORADO SPRINGS GAZETTE
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