One Unexpected Consequence of the Trump Tax Cuts

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Over the last thirty-five years as I’ve worked with taxpayers, I’ve consistently heard them say, “I will give a donation if I can get a tax deduction.”

That’s an interesting reality for millions of Americans. Our generosity can be fueled by the “carrot” of reducing our income tax burdens.

It is no accident that our federal government offers a financial benefit for charitable deductions. The government doesn’t need to carry whatever is carried by charities. When we make charitable contributions, we are helping to reduce the federal-level burden of caring for the nation’s needs. In the United States every year, a significant number of people are able to reduce their taxes by reporting a deduction to nonprofit charities: churches, synagogues, hospitals, nonprofit organizations all over the country, etc. These organizations help see to the country’s practical needs, and we get to lower our taxes by giving to these needs—it is a great system.

However, in January of this year something changed—the Tax Cuts and Jobs Act of 2018 became law. We call it the Trump tax cuts, and we’re enjoying the benefits of this new law in our economic stimulus. We are seeing some of the lowest unemployment rates and some of the biggest corporate earnings, which support raises and bonuses and many of the things that help us every day in our homes.

As beneficial as the Trump tax cuts have been, they just about double the requirements of the standard deduction. In other words, when we sit down and start to prepare our 2018 income tax returns, we may find that the total of our charitable donations (plus the amount we get to write off because of property taxes, medical expenses, and mortgage interest) no longer rises above our standard deduction.  

What will happen to our giving if it no longer benefits us financially? Will we give anyway, or will we retreat from our support of charities?

Why Do We Give?

I’m no prophet, but I am an accountant who has a brain and I can look into the future. I believe there is a storm brewing for our American charities. Millions of people are about to experience the removal of their primary motivation to give to charity. Without that motivation, many people will no longer give. They will capture that cash savings and draw it into their homes instead.

This is a heavy topic! But let’s consider what we know to be true. As Prosperous Souls, “Caesar” doesn’t motivate us to give. Jesus said, “Render to Caesar the things that are Caesar’s; and to God the things that are God’s” (Matt. 22:21). We need to take a look at what we’re supporting and begin to sort our motivations. Whether we’re supporting Wikipedia or our home churches, this question needs to be answered: why are we giving?

Biblical giving essentially concludes with this idea: whatever you give, give it cheerfully because it is from gratitude and devotion to Christ. We don’t want our giving to collapse just because Caesar no longer acknowledges it as a tax deduction.

By comparing the government of the United States with Caesar, I’m not making an ethical statement; I have no opinion on those things in this venue. But I want to provoke you as a Prosperous Soul to take your generosity before the Lord and make it intentional. Understand the following points:

  • Who you give to

  • Why you give to them

  • How giving is your act of faith

The welfare, charity, and nonprofit organizations and economics in the United States are a valuable component that sees to the needs of our nation and helps the poor and underprivileged. As Prosperous Souls, we get to be part of the solution. Our giving is a response of worship and gratitude, even if it doesn’t alleviate our tax burdens.

Lauren Stinton