Reed, Non-Profit Leaders Warn that House & Senate-Passed Tax Plan Could Harm Non-Profits & the People They Serve

Press Release

The holidays are supposed to be a season of giving, but the partisan, corporations-first tax plan moving its way through Congress is making this a taxing time for many non-profits and charitable organizations.

Today, U.S. Senator Reed joined with non-profit leaders from the United Way of Rhode Island and the Rhode Island Foundation to warn that that the U.S. House of Representatives and U.S. Senate-passed tax bills would end up taking resources from the non-profit sector and could harm charitable organizations and the people they serve.

Reed noted that the Republican tax changes will treat corporations better than individuals, boost the deficit by at least $1.5 trillion, jeopardize economic growth, and force many middle-class families to pay more. Both the House-passed and Senate-passed tax bills contain provisions that could also cause a significant reduction to charitable giving in Rhode Island and nationwide, negatively impacting non-profits' ability to help feed, educate, shelter, and nurture those in need.

"The Republican tax bill is tax malpractice of the highest order. It is not helping middle-class families, it's not making us more productive, and by its own terms the deficit goes up with no real benefits for the bulk of Americans," said Senator Reed. "One of the most disturbing aspects of this bill is the conscious effort to deny resources to our non-profit sector. If this bill becomes law, it's very likely we will see charitable giving go down. Everything we should be doing to help people we'll see less of, and it's going to ultimately hurt individuals and communities. This tax bill isn't about the middle-class or helping increase wages, this is about getting money to the richest people through the tax system."

Currently, the tax code encourages charitable giving by individuals who itemize their expenses. In 2016, individuals accounted for nearly three-quarters of charitable giving in the United States, providing over $281.8 billion to charities and non-profits. However, proposed changes to the tax code could take away incentives for individuals and households to donate.

Indiana University's Lilly Family School of Philanthropy recently released a study estimating that if Republican changes to tax deductions went into effect, total nationwide charitable giving would be reduced by $13.1 billion.

The tax bill passed by the U.S. House of Representatives also includes language repealing the Johnson Amendment, which prohibits non-profits from donating to political campaigns or endorsing candidates. Ending the Johnson Amendment could pressure many non-profits to give to political candidates, siphoning away money that should be directed to helping people. It would also enable political organizations and secret money groups like Citizens United to qualify for the same tax-exempt status as churches and other places of worship.

"Non-profits should serve communities, not political candidates. The changes in this law could significantly damage the integrity of non-profits and reduce transparency in politics," stated Reed. "Congress should help, not hinder non-profits and charities. We need real, responsible tax reform that actually helps the middle-class and working families. We need targeted tax incentives that will lead to real job and wage growth, not just stock buy-backs to pad corporate bottom lines."

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