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Lower charitable deduction bad news for NPR

Posted: April 20, 2011 - 9:20pm

Just when National Public Radio needs it most, the Obama administration wants to reduce the tax deduction for charitable contributions.

NPR went into serious fundraising mode when the House of Representatives voted to end the taxpayer subsidy that provides about 15 percent of the budget for a typical NPR station.

In an on-air appeal Ira Glass, host of NPR’s “This American Life,” said that only one in 10 listeners makes a direct financial contribution to the network.

Loss of NPR’s taxpayer subsidy wouldn’t be a problem, Glass suggested, if more of its audience would pony up. Its fate doesn’t have to rest with Congress, he said, because NPR has something more powerful on its side — a community of 34 million listeners.

Now that’s a statement Alexis de Tocqueville could have met with a hearty, “Oui, absolument!”

The great 19th-century chronicler of American civil society argued in his classic “Democracy in America” that the nation’s greatness rests on thriving communities of mutual interest taking initiative. They didn’t depend on decisions from a central government.

The genius of the U.S. Constitution, de Tocqueville wrote, was limiting the power and purpose of the central government in a way that encouraged individual and community responsibility and action. In the eyes of the visiting Frenchman, the results were extraordinary.

The Framers’ careful restraint of the national government eroded over the last century. Our government took on many tasks they didn’t design it to fulfill, encroaching on the rightful domain of family, community, churches, private groups and businesses.

That’s a big reason we face a budget crisis today. It’s also why some leaders in Congress seek to restore constitutional limits on Washington’s role in Americans’ lives, out of respect for the institutions of civil society and the voluntary nature of their support.

NPR might have wished for more friends in the House. But as for tax-deductible donations from private givers, which make up the bulk of its budget, the network also may wish for a better friend in the White House.

Yes, NPR survived the last-minute budget deal made by lawmakers and President Barack Obama to fund the government through September. But the issue is sure to arise again as their attention turns to the fiscal 2012 budget.

Obama’s proposal includes tax changes that could discourage those who give the most to charity and nonprofit causes such as NPR (and, full disclosure, my employer, The Heritage Foundation).

The president’s plan would reduce the value of itemized deductions for higher-income taxpayers. Currently, those in the top bracket who donate to nonprofits can take a deduction equal to their tax rate — 35 percent. If the president gets his way, the deduction would drop to 28 percent and their tax rate would go up to 39.6 percent.

That’s bad news for NPR fundraising. But it doesn’t end there. The deduction reduction would take a bite out of all kinds of charities that help folks in need — from churches to hospitals to homeless shelters.

When Obama made a similar proposal in 2009, researchers at the Center on Philanthropy at Indiana University estimated it would slash itemized giving by nearly $4 billion a year. As Heritage Foundation analyst Ryan Messmore noted in a recent report, that’s more than the combined operating budgets of the American Cancer Society, World Vision, St. Jude Children’s Research Hospital, Habitat for Humanity and the American Heart Association.

And it’s not just about the money. It’s about who controls the money, and how well they spend it.

As Messmore writes, the question we should ask about the Obama deduction reduction is “whether the federal bureaucracy can deploy the resources of the wealthy more effectively than nonprofit, civil society organizations can.”

After nearly a half century of the War on Poverty, we know federal programs have a dismal track record in putting the impoverished on the path to independence.

Americans paid dearly for that failure — not just in taxes, but in the human toll taken by a culture of intergenerational poverty. The War on Poverty has racked up $16 trillion in bills since 1965 and is on schedule to cost another $10 trillion over the next decade.

Reducing the charitable deduction would shift resources from individuals to the government. It would send the message that government — rather than neighbors and charities — should take more responsibility for helping those in need.

That’s exactly the reverse of what de Tocqueville so admired about America two centuries ago. And more bad news for NPR.

• Marshall is director of the DeVos Center for Religion and Civil Society at The Heritage Foundation.

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islander
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islander 04/21/11 - 08:37 am
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lost direction

Given the Republican plan to gut the budget there is far more to be concerned with than the charitable deduction proposals. If you focus on only one of the proposed changes you will soon loose site of how ridiculous the conservatives are when it comes to what will be reduced or eliminated and what will not be affected at all.

madison89
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madison89 04/21/11 - 08:40 am
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"After nearly a half century

Unpublished

"After nearly a half century of the War on Poverty, we know federal programs have a dismal track record in putting the impoverished on the path to independence. "
I would add government programs at ANY level, in general have a dismal track record.

Calypso
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Calypso 04/21/11 - 08:34 pm
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Reducing tax deductions for

Reducing tax deductions for charitable donations is meant as a direct slam on churches by the progressives. But once again the hypocrisy is amazing as they've infiltrated the churches with their social justice agenda. It's more of the 2+2=5 mentality.

They want the government to be The Almighty.

Persnickety Persimmon
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Persnickety Persimmon 04/21/11 - 10:11 am
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@Calypso: yes, it's all about

@Calypso: yes, it's all about the churches. That's our goal, all right: to exterminate religion by... Reducing the amount of charitable contributions rich people can deduct from their tax return. It makes PERFECT SENSE.

And no, we don't want government to be "the almighty." We want government to do what government is supposed to do, not outsource it to private organizations whose #1 priority is not the general welfare of the United States, but profit.

Calypso
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Calypso 04/21/11 - 11:22 am
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pp, atleast we know which

pp, atleast we know which side you're on now as you continue to blow smoke about everything!

And what exactly is "government supposed to do"? Enlighten us.

Last time I checked, churches '#1 priority wasn't profit'. Do you really believe all this crap you write or are you just being obnoxious?

Why don't you put together a list of American corporations and their charitable donations for us all to see? It might be a real eye opener for you and others.

Persnickety Persimmon
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Persnickety Persimmon 04/21/11 - 11:46 am
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Okay, it's true that a church

Okay, it's true that a church isn't out for profit. I'll give you that one. I was referring to the tendency of conservatives to bloviate over the free market, but you didn't mention that, so I apologize for insinuating you advocated that.

Anyway, government is supposed to govern. It provides the framework that makes society possible, and a big part of that framework is a social safety net--that's what the first half of the 20th century was all about, and it makes the middle class possible. Private charity is incredibly inefficient when compared to centralized programs like what government provides, due to a lack of coordination, tracking issues, and a general lack of resources. Food banks are great when you're starving, but a government job training program is better in the long-term, or food stamps if your poverty is prolonged.

It's also worth noting that when corporations give away money, it's for PR and tax purposes, not some sense of altruism. It's also important to compare what they've taken vs. what they've given. Wealth is a limited resource--when Wal-Mart's business results in a few billion dollars in the hands of a relatively small number of people/entities, that's a few billion dollars everyone else doesn't get to have. If they donate a few million dollars, then they're still coming out way ahead. Most people do not understand this.

billb
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billb 04/21/11 - 12:21 pm
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Donations

Aren't the tax breaks for the wealthy charitable donation to the wealthy? No I am not double talking. The wealthy are getting huge tax breaks and Republicans want to cut Public Radio.

swimmergirl
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swimmergirl 04/21/11 - 02:26 pm
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Hmmm.......

I'm actually up in the air about NPR recieveing federal funding - on the one hand, it's such a small amount of funding, that it's clearly an ideological attack rather than a fiscal one. By comparison, the extra engine for the F-35, which the pentagon has said since prior to 2009 that it neither wants nor needs - costs the US taxpayer $28 Billion - - - A MONTH.

NPR recieves around $7 million a year "directly" - though it does so through competative grants from the dept of Education and Commerce, and around $86 million, from other stations as fees for belonging or airing their programing. This money goes to the Corporation for Public Broadcasting, also through a grant, and is distributed to over 600 different public radio stations. Those stations then use some of that money to buy programs like "Car Talk" and "Wait Wait, Don't Tell Me" and "A Prarie Home Companion" - which in turn brings those local stations listeners/advertising dollars. My understanding is that the current bill doesn't cut the funds to CPB, it only states that the funding cannot be used to purchase NPR programs - which seems A LOT like government telling stations what to do - again, not "limited government".
http://www.msnbc.msn.com/id/42130522/ns/politics-capitol_hill/

I'm not certain how the CPB is tasked with getting or distributing these funds, or how many small public radio stations would go belly up without the funding, or what else it is spent on. I also think there are probably TONS of things the government awards through competative grants that would also need to be cut if this particular competative grant is cut. I also think it's likely that NPR itself would make up those fees in private contributions - though many people would likely lose the ability to listen to Click and Clack on their local radio station, which would clearly be sad.

As for charitable donations in general - it does seem entirely mean-spirited to cut a tax break for charitable donations, while at the same time cutting programs that will need more charitable donations.

swimmergirl
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swimmergirl 04/21/11 - 04:27 pm
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churches certainly profit the prophets.....

It's clear that "non-profit" doesn't extend to cars, homes, etc of the leaders of mega-churches, or the opulence of the buildings themselves - which has always struck me as immensely hypocritical.

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