One of the more subtle aspects of the Republican tax plan provides a disincentive working against charitable contributions by individuals and families in the middle class. For decades, the cost of a charitable donation was offset by a tax benefit. The new proposal for a larger standard deduction trades off against higher tax rates, which may result in a slight benefit or slight cost to each individual middle-income citizen. But the loss of a significant benefit for each individual giving to a school or a church or other non-profit organization may add up to a major reduction in total donations.

One facet of the United States income tax policy has been to encourage and reward charitable giving. For a family in the $40,000 to $70,000 range of income, where the tax rate has been 15 percent, a decision to give $100 to a local hospital or art museum or college would cost that family $85. The remainder was a reduction in their income tax bill by $15. Under the proposed plan the cost to make the same contribution will be the full $100.

Under the proposed plan millions of middle income families are likely to cut back slightly on their donations because the donations will cost more. A family that might normally make $4,000 worth of donations, knowing that there would be a $1,000 reduction in taxes, will now think that its budget allows for $3,000 in donations. The missing $1,000 will hit the bottom lines of our society’s good-deed doers. And when that is multiplied by millions of families, the result will be for the bad.

Jim Perkins