Recognizing the serious economic conditions and fiscal challenges facing our country, Independent Sector advocates putting the nation on a sustainable fiscal path through a combination of reasonable spending reductions to both discretionary and mandatory programs, as well as revenue increases that maintain the progressivity of the tax code.
It is imperative that federal spending cuts be undertaken prudently, so as not to increase poverty or widen economic inequality. This is an attainable goal. Each of the major bipartisan deficit reduction packages and automatic budget cut mechanisms of recent decades – the 1985 and 1987 Gramm-Rudman-Hollings laws, the 1990 Budget Enforcement Act, the 1993 deficit reduction package, the 1997 Balanced Budget Act, and the 2010 pay-as-you-go law – exempted key low-income programs while reducing spending and shrinking deficits.
In fact, the 1990, 1993, and 1997 deficit reduction packages are notable for having improved the Earned Income Tax Credit, strengthened the Supplemental Nutrition Assistance Program, and created the Children’s Health Insurance Program. Recent history has shown that reducing poverty and expanding low-income assistance programs are not mutually exclusive with making progress toward long-term fiscal stability.
However they are implemented, spending reductions alone will not produce enough savings to alter our current fiscal course. Additional revenue must be raised. And while an increasing number of stakeholders from across the ideological spectrum now acknowledge this, there remain differing views regarding how to increase federal revenue. We favor an approach based on equitable burden sharing, and we believe a plan that includes a modest tax increase on the two percent of Americans who can most afford it offers the best hope of moving forward in a fair and balanced way.
At the same time, any proposal that would reduce the tax incentives for certain taxpayers to give to charity will penalize not those taxpayers, but rather the vast number of individuals, families and communities who rely every day on the programs and services made possible through charitable giving. Whether in the form of an aggregate cap or a percentage decrease in its value, we oppose any limitation on the charitable deduction.
We already see the results of government austerity – nonprofit organizations are being asked to serve more people in more communities with fewer resources. In this environment, limiting tax incentives for charitable giving will threaten the ability of nonprofits to keep pace with the growing need for assistance.
Since 1917, when charitable donations were first made tax deductible, our society has embraced the entire range of social purposes and important causes that citizens choose to pursue through charitable organizations. Whether focused on the arts, social services, education, scientific research, or spiritual matters, this tradition has sparked innovation, saved lives, and enriched our communities. Through the charitable deduction, we have established a century-old policy that has stimulated charitable giving while making clear that our government and our society value the contributions made by every charitable organization.
We favor a balanced approach to our country’s fiscal challenges that affirms our unique cultural heritage and preserves the ability of the charitable sector to meet critically important needs in society.
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Independent Sector is a nonprofit, nonpartisan coalition of approximately 600 charities, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the nonprofit and philanthropic community. Learn more at IndependentSector.org.
