Another shibboleth of the smart crowd opposing the Trump-GOP tax cuts — namely, that the doubling of the standard deduction would result in a decline in charitable giving by Americans — is now proven wrong.
A study of charitable giving in the United States after a full-year of the new tax code being in effect found that donations actually increased 1.5 percent. Blackbaud’s study found that large and medium non-profits saw increases of 2.3 percent and 2 percent respectively.
This belies a misunderstanding of Americans by much of the left (which give considerably less to charity per person than people on the right) that it is for tax purposes that Americans give to charity. It’s actually because Americans are extraordinarily generous people and this flows back to our roots in Judeo-Christianity.
This was relatively obvious to anyone who wanted to see it by realizing that before the tax reform package, about one-third of Americans itemized — meaning they could claim charitable deductions. But fully two-thirds of Americans give to charity, according to Peter Lipsett, vice president at DonorsTrust, a donor-advised fund that granted more than $140 million in 2018.
Obviously an awful lot, perhaps a substantial majority, give for reasons not associated with tax savings.
An understanding of the American people should have pointed to that result without the numbers. We see it during every global disaster. Americans always lead the way in disaster donations. Not just the government — the American people through individual donations to private charities.
Nonetheless, the right-of-center American Enterprise Institute predicted that charitable donations would decline 4 percent because of the tax changes. The left-of-center Urban-Brookings Tax Policy Center estimated the decline would be about 5 percent.
A story from USA Today summed up these supposed fears under the headline: “Trump’s 2017 tax bill will probably mean billions less in donations for charities this year.” (Note how when it is considered a negative story, it is the Trump tax cuts, but remember, this was driven by traditional conservative Republicans in Congress, with Trump’s approval.)
Here’s the summary thinking from the story:
“(Nonprofit groups) will learn how much of a dent President Donald Trump’s 2017 tax bill will put in their donations.
“Studies predict the damage to charities nationally will be $13 billion to $20 billion, or 3 to 5 percent, said Michael Nilsen, vice president of communication for the Association of Fundraising Professionals. Charitable giving totaled about $410 billion in 2017, according to estimates by Giving USA, which provides data on charitable giving.
“The 2017 Tax Cuts and Jobs Act increased the standard deduction that people may take on their federal tax returns and limited to $10,000 the amount of state income, sales and property taxes that could be deducted. The end result, the Tax Policy Center predicted, is that about 16 million returns will itemize deductions for charitable gifts compared with 37 million in 2016.
“That, in turn, is likely to cause people to give less, since they won’t be getting the tax break they once did.”
They were all, universally, wrong. So how did the left and some on the right and, frankly, so many people supposedly “in the know,” get it so wrong?
This probably aligns with the concept of elites and the rest of the country.
People trained at elite universities, living in Washington or New York or working in newsrooms or at think tanks and hobnobbing with others from the same schools and locales, were quite convinced that a decline in charitable giving would be the natural result of losing some of those deductions.
Most Americans however, if polled on the subject, would most likely have predicted that charitable giving would not be affected by tax cuts. They might even have suspected that it would increase if Americans took home more money.
And these average Americans would have been right.
Rod Thomson is an author, radio and TV commentator and former journalist, and is Founder of The Revolutionary Act. Rod also is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.
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