Taxes

The GOP’s Tax Cuts Took an Axe to Charity

JM Ashby
Written by JM Ashby

Republicans like to say that Americans should depend more on charity than the government, but the GOP's package of tax cuts may have obliterated charitable giving in the United States.

According to data from the Internal Revenue Service (IRS), Americans cut their charitable giving -- or at least the amount they're taking deductions on -- by at least $54 billion as of May 2019.

“The amount is just jaw-dropping,” said Michel Nilsen, vice president of communications and public policy at the Association of Fundraising Professionals. “This is a really significant drop. This to me is a sign that giving was hurt.” [...]

The TCJA doubled the standard deduction — the amount taxpayers are allowed to subtract from their taxable income to reduce their tax bill. Taxpayers can still itemize their deductions, but there’s less incentive to do that now that the standard deductions are higher. Many worried that would lead to fewer taxpayers itemizing, and in turn fewer people donating to charity as a way to get a deduction.

Those predictions appear to be coming true, according to the most recent IRS data. So far this tax season, 11 million taxpayers have itemized deductions for charitable contributions, compared to 31 million at this point in 2018.

It's possible that some Americans are still donating to charities without itemizing it, however that cannot account for the entire discrepancy between 2018 and 2019.

Experts who spoke to MarketWatch say charitable giving has likely suffered as a result of the GOP's policy even if it has not dropped as much as these numbers indicate.

We probably won't know until the end of the year just how much the GOP's has harmed the charities they say we should all lean on in times of need.

The good or bad news, depending on your perspective, is that this portion of the GOP's tax cuts is not permanent. The tax cuts for corporations are the only permanent tax cuts.

  • Here’s some anecdotal evidence for you….I used to itemize my donations because it used to make a difference in my taxes. I noticed that it no longer makes a difference so I stopped. I still donate tons of stuff to Goodwill every year, I just don’t keep track of it anymore.

  • Kevin Krasnansky

    It’s possible that some Americans are still donating to charities without itemizing it, however that cannot account for the entire discrepancy between 2018 and 2019.

    Why not? To make sure a conclusion, we’d need to know the number of people who, last year, had itemized deductions over the new standard deduction. Also, we need to know the total number of filers so far this year and at this point last year.

  • muselet

    As far as Rs are concerned, there are good charitable donations (the kind that let a rich person slap his name on a fancy new building) and bad charitable donations (the ones to organizations which provide services to the needy), and there’s little or no overlap between those.

    I’m not for a second suggesting the Rs intended their tax deform bill to discourage charitable giving—they’re simply not that clever—but I am suggesting that they’re not unhappy about that effect.

    Are there no prisons? Are there no workhouses?

    Soulless bastards.

    –alopecia

    • Kevin Krasnansky

      What about donations to churches? There are some very Republican leaning churches with tons of money. Some do good, some do not, but your dichotomy doesn’t fly.

      Also, I think imputing the general motive that Rs don’t want anyone to donate to charity is unfounded. For one, see churches.

      • muselet

        I overgeneralized.

        I didn’t think of churches when formulating my comment. I would argue that Rs make the same distinction between good and bad places of worship (I can’t imagine an R elected official praising a mosque for its charitable works, for example), but that’s probably a discussion for another time and place.

        Again, I don’t believe the tax deform bill was intended to discourage charitable donations, but I also don’t believe Rs will lose any sleep over it.

        –alopecia

        • Kevin Krasnansky

          Agreed on all counts.