The obvious explanation is that, because the main purpose of the bill is to extend the 2017 tax cuts and create new ones, Congress is seeking some fiscal balance. And it has apparently resorted to looking for pennies in the couch cushions.
That’s not even an apt metaphor because pennies hold too much value. The Joint Committee on Taxation, a nonpartisan committee in Congress, estimates the House provision that taxes foundation income more heavily would yield about $15 billion in revenue for the government over 10 years. Meanwhile, the nation’s debt is projected to grow by $3 trillion in that time because of the Big Beautiful Bill.
Of course, charities can never substitute for government’s role in helping people. You know this intuitively; just compare how much of your income goes to taxes with what you give to charities.
In Minnesota, all of the giving by organizations and individuals amounted to $8.7 billion in 2022, the latest year for which data is available. By contrast, federal and state spending on Medicaid in Minnesota totaled $16.3 billion that year, and $18.5 billion last year.
There is one provision in the Big Beautiful Bill that charitable organizations were pleased to see: a charitable deduction for Americans who don’t itemize when they file income taxes.
Because the 2017 tax bill raised the standard deduction, fewer people itemized and took a deduction for giving to charities, which ultimately reduced the incentive to donate. The House version of the new bill restores the incentive by creating a charitable deduction of $150 for individuals who don’t itemize their taxes; the Senate version has a $1,000 deduction.
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