More ripple effects of the POS tax bill- less giving to charity

I've already discussed how the changes in the Piece of Shit tax bill that is now law will likely hurt the housing market because the tax writeoffs of home ownership will be less likely to be used due to more people taking the standard deduction, which lowers the overall demand for housing. But there are other exemptions that also won't be used as a result of these changes, and one of the biggest may be that there are less donations to charity starting in 2018.

Patrick Rooney is the executive associate dean for academic programs at Indiana University-Purdue University Indianapolis, and is also a professor of economics and philanthropic studies there. He looked into this issue a couple of months ago, and found that the effect would be sizable starting in 2018. But that was based on the original House bill that had different thresholds compared to the bill that was signed on Friday by Trump. So Rooney recalculated the effects, and CBS Marketwatch picked up on his findings, which said that even fewer people would write off charitable donations, so there would be less giving.

Conversely, the new law increases the standard deduction by 90.5% for married couples compared to the 75% boost we were expecting when we estimated these repercussions. This change would magnify the toll taken on philanthropy compared to our base model.

That means the share of filers who get a tax break — a built-in incentive — for their charitable gifts will be falling even further than my team had estimated. This result is further exacerbated by the loss in personal exemptions of more than $4,000 per person through 2025...

These lost personal exemptions will reduce the after-tax income that millions of Americans will have on hand to give to charities. And the GOP tax package does not create any incentives to give for the vast majority of households, some 95% of which will not be itemizing their returns.

In short, I expect the loss to charitable giving from the tax-code changes to top the $13.1 billion decline we previously estimated just for households.

DC Republicans just made this less likely

In addition, Rooney notes that while estate tax provisions allow for a reduction in "available assets" if they're given away to charity, these become less likely to be utilized after 2017. Because the exemption of assets is doubled to $22 million under the GOP tax bill, that means there are fewer people that would need to give away items to charity to get under that cap, and even those that are above it don't have to give away as much.

Likewise, the reduction in corporate tax rates means that there is less bang for the bucks that corporations choose to donate, and so Rooney says you can expect that type of giving to decline as well.

My colleagues and I have not yet thoroughly studied how the pending reductions in corporate marginal tax rates might affect how much money businesses give to charity. But our models do show that the proposed reductions in the top corporate tax rate from 35% to 21% would reduce the incentives for corporations to give.

Businesses give for many reasons. Nevertheless, it is reasonable to expect that dramatically cutting the top corporate tax rate will reduce corporate donations by an estimated $1.3 billion — a 7% decline from the amount businesses gave in 2016.

In all, Rooney estimates that charitable donations will go down by more than $21 billion a year. And that damage to the non-profit sector would be in addition to the other economically destructive measures that the Piece of Shit bill incentivizes, including profit-hoarding, fewer people with health insurance, and increased inequality due to the lack of wage gains by employees.

And perversely for Republicans, if the higher deficits caused by this Piece of Shit tax bill lead to cuts in social services, the potential decline in charitable giving causes a double-whammy.

Underappreciated aspect of the tax bill: it will simultaneously put more pressure on charity because of reduced government services, but reduce the incentive to give. United Way is predicting pretty significant reduction in revenue. https://t.co/yYF1drO3m0

— Philip Hackney (@EOTaxProf) December 19, 2017

In responsible governance, this would lend itself to more government involvement in solving social problems, precisely BECAUSE the private non-profit sector will become more likely to lack the resources to adequately deal with those issues. But it seems like the average greedhead and their puppet GOP politicians may be just fine with government failing to step into that void. It would then put more people at the mercy of Lord Business, and that does seem to be their endgame for a lot of these moves.

But I bet the overwhelming majority of Americans won't accept it, and the fact that the GOP was so careless not to think through how their Piece of Shit bill might reduce charitable giving is yet another reason to dump these slimeballs ASAP. In the meantime, iof you're getting the typical year-end "please give" notices from local charities, perhaps it'll be worth your while to throw some money their way in the next week (if you have the disposable funds) instead of waiting until 2018 to do so.