The impact of the recent tax cuts passed by Congress is beginning to be felt in the paychecks, investment portfolios and on the bottom lines of many businesses. It will be a while before pundits on both sides of the political spectrum have real data to bolster their claims of how these changes in tax law positively or negatively impact various segments of society. But I am not optimistic that even the best-intentioned, objective study of who benefits and who loses will cool the heated rhetoric that has come to define this time in our nation’s history. So I choose to leave the political debate about this issue to others for now – sort of.
It is true that businesses and wealthy Americans will receive significant benefits from the new laws. From lower corporate tax rates to fewer wealthy Americans being subject to the estate tax, there are clear signs that the affluent in society will have more disposable income. Similarly, with the doubling of the standard deduction, lower and middle-income Americans will have a smaller portion of their take-home pay subject to income taxes. So at least for now, many of us win.
But what about those whose life circumstance requires assistance from others? Will the benefits of our larger paychecks, bigger after-tax corporate profits, and estate tax savings have a positive or negative impact on our charitable giving? Will Americans use our new-found prosperity to offer more or less assistance to those in need?
The argument that tax changes will hurt charitable giving cites in-depth research by the Indiana University Lilly Family School of Philanthropy Study, commissioned by the Independent Sector, showing a potential loss of more than $13.1 billion per year. While I have not seen official statements by the current administration with their position on this particular issue, some economists argue that the anticipated increases in real disposable income from the lower tax rates will generate an increase in giving from wealthy and average-income Americans of between 2.5% and 4% next year.
Pundits, economists, and philanthropic researchers are all weighing in on this debate in their own way. Regardless of your sense of how right or wrong any of these perspectives are, regardless of the size of your benefit from the tax changes, and regardless of your politics, I hope we can all stay focused on helping those in need in our community. Start by remembering the often quoted and paraphrased sentiment that ”to those who much is given, much is expected.“