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In taxes, Obama must be clear on charity
For the last 3 years, we have been able to rely on President Obama for a few things in his budget proposals. Obviously increased spending comes to mind, but something else has been particularly disturbing: his attack on philanthropy and charities.
In his State of the Union address “Blueprint for an America Built to Last”, the president talked a great deal about fairness and taxes but was unclear on what he will propose this year for the charitable deduction or how he plans to encourage charitable giving. One small line in the Blueprint signals the president is shifting his stance on the charitable deduction, but we must ensure this shift does the most for charitable giving. Nonprofits play an important role in helping the needy, providing healthcare in rural areas, conducting and funding medical research, educating kids who come from tough situations, and much more. Yet every year, President Obama has insisted on proposing a reduction for itemized deductions, including the charitable deduction as a way to pay for whatever government program he wants at the moment.
While there is hope the president has heard the voices of the charitable community, he needs to be clear about his plans and there are three reasons why:
1. The government does not have the money to support all of the vital functions the nonprofit sector provides. Gone are the days of borrow now and pay later. Our government has some tough choices ahead and the needs fulfilled by the nonprofit sector can’t possibly be fulfilled by the government when we have to defend the country and support an aging population. Aside from food pantries, homeless shelters, museums, orchestras, community theaters, zoos and many other organizations that are already struggling will encounter an even bleaker future if, under the current tax code, the charitable deduction is reduced for anybody. We cannot be reliant upon the government to support all our institutions and solve the diverse problems we face.
3. The charitable deduction is different from all other tax incentives. Unlike other tax incentives, the charitable deduction encourages Americans to give away their money for the benefit of others. That fact makes this incentive, above all others, unique and supports my first two reasons why we must protect the incentive to give. It is likely Congress will consider tax reform this year. Whether anything will be achieved remains to be seen, but what is important is that in any discussion, incentives to give for everybody remain a strong part of our tax code. There are reasons so many people open their wallets at the end of the year—first, because it’s the right thing to do and second, because there is an extra incentive to do so. Why not incentivize good behavior?
Our nation is at a crossroads as we come to this critical juncture in our fiscal future. We must choose to continue encouraging everybody—the wealthy, the middle class, and everybody in between—to give to charities of their preference. Through individual initiative, the private sector has performed tasks to help society where Government has failed both domestically and internationally.
Americans gave away close to $300 billion last year. The reason why people choose to participate in philanthropy is simple: we know how to spend our money better than the government. We have the ability to monitor every dollar spent, and make sure it is spent in the most efficient manner. The impact of privately funded philanthropy over the last century has been imperative to improving our society. If our efforts are hindered by unnecessary government regulations and proposals in Washington to limit giving, the American people will suffer as a result.
Hayes is a former five-term Republican from North Carolina (1999-2009), president of the Cannon Charitable Trust, director of the Cannon Foundation, president of the Hayes Family Foundation, and owner of Mount Pleasant Hosiery Mill.
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