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What the GOP tax bill means for California nonprofits
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Senate Majority Leader Senator Mitch McConnell (R-KY) and other Republicans speak to the press after the Senate passed tax reform legislation on Capitol Hill December 19, 2017 in Washington, DC.
The US Senate narrowly approved a sweeping tax overhaul early Wednesday, putting President Donald Trump on the brink of his first major legislative triumph nearly a year after he took office. / AFP PHOTO / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
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The GOP’s tax bill has now made it through both the House and the Senate, and some California nonprofits are starting to worry.
Currently, about a third of California taxpayers itemize their returns, reducing their federal tax bill through a range of specific deductions — including the money they give to charity.
But the GOP tax plan limits the deductions people can take, and economists say that will push a lot more people away from itemizing in the first place.
Does that mean fewer Californians will give to charity? California Association of Nonprofits CEO Jan Masaoka says not necessarily.
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“The tax component tends to influence the amount, not whether or not you give," Masaoka says.
She thinks people will still give. She just worries they won’t give as much as they used to.
“You might think, 'Well I usually give the Sierra Club $100, but because it’s not going to help me out tax-wise, this year I might just give $50,'” she says.
Masaoka also worries that the GOP’s plan could eventually lead to cuts in government aid. She says that would put more strain on California charities that provide social services.
Nicolas Duquette, an assistant professor at USC's Sol Price School of Public Policy, says the effect of these changing tax incentives will be felt by different kinds of nonprofits in different ways.
Charities serving the neediest people "may very well have a difficult time," Duquette says. "They tend to solicit donations from a broad array of people. If there is this large share of occasional donors who used to itemize and now don't, it may be that their donor base is more affected."
Duquette says other types of nonprofits that support things like culture, the arts and community service often have different kinds donors. And those donors may still find strong tax incentives for charitable giving under the new rules — for instance, through donations of stock.
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"Even with these changes at the federal level, wealthy Californians still receive a lot of tax benefit from making a donation," Duquette says.
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