Lower Charitable Deduction Bad News for NPR

COMMENTARY Civil Society

Lower Charitable Deduction Bad News for NPR

May 2, 2011 3 min read
COMMENTARY BY

Former Senior Visiting Fellow

Jennifer A. Marshall was a senior visiting fellow for the Institute for Family, Community, and Opportunity at The Heritage Foundation.

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 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 ResearchHospital, 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.

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

First appeared in The Sacramento Bee

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