To Give or Not to Give…That is the Question
A recent study by the Independent Sector indicated most Americans support legislation allowing everyone to receive a tax break for their charitable gifts, regardless of income, and regardless of the standard deduction or not. I can’t think of one single American citizen who wouldn’t think that’s a good idea.
This has all come to fruition after Congress passed legislation in 2017 that doubled the standard deduction. But by doing so, it reduced the number of people itemizing their deductions, which includes charitable giving. Many nonprofits at the time, and still today, are not happy because it reduced a reason, financial, for an individual to make a charitable gift.
Here’s my problem with the idea. And maybe this goes back to my studying of tax law and my interest in macroeconomics. We, in the United States, have a $31 trillion debt that eventually is going to have to be repaid. Unfortunately, that number has grown exponentially in the last decade to 25 years. If everyone gets a deduction for gifts given, that’s going to increase the annual deficit of the federal government unless there’s less spending to offset it. And I think we all agree a decrease in spending seems pretty unlikely. At least the offsetting part. So, what are we to do?
There’s no one that dislikes paying taxes more than I do. I would much rather have that money in my back pocket to spend on the things that I value the most, all of them starting and ending with my family. But if we keep cutting revenues and do not decrease spending, the annual deficits overall will put a stranglehold on the American economy that will be very hard to deal with…. both in the short and long-term.
