Tax hikes on Montana foundations rob charity to fund big government spending | Elizabeth McGuigan

While members of Congress are in Washington grappling with tax reform, the people of Montana are looking at a mixed bag.

On the one hand, extending President Trump’s 2017 tax cuts is a worthy effort that will put more money in Americans’ pockets and drive the economy forward. It fuels economic prosperity, nurtures the uniquely American spirit of generosity and plays a critical role in supporting local programs and services in our communities. This generosity empowers the work of thousands of private charitable foundations across the country, including several in Montana, that have been putting Americans first for generations.

But it’s not all good news. Unfortunately, Congress’ long-awaited reconciliation bill includes a tax hike on private charitable foundations to foot the government’s spending bill. Currently, the excise tax on all charitable foundations is 1.39%, but the proposed legislation would enact rates of 2.78%, 5%, or even 10%, depending on the size of the foundation. Some foundations, including those in Montana, could see their tax bill increase over fivefold.

For decades, American citizens have come together and formed nonprofit organizations to champion private solutions to our nation’s greatest challenges, with philanthropy as a key partner. The proposed tax hike on foundations would drastically reduce the resources available for effective charitable groups that advance liberty, opportunity, and personal responsibility — harming Americans in every single state. This means fewer dollars for a wide range of worthy causes: Educational opportunities for low-income students, groups focused on preventing veteran suicide, foster care organizations that keep families together, food banks, homeless shelters, faith-based charities, and many other examples that help communities big and small.

This is especially harmful to Montana’s nonprofit sector and, by extension, the people who rely on charity. In Montana alone, there are nearly 12,000 nonprofit organizations that strengthen local communities and improve lives. From supporting access to quality education and health care facilities to other critical services, the contributions of national, regional, and local foundations are key pillars of our society. They are especially adept at filling the gaps where government is less effective.

Allowing the IRS to snatch private Americans’ hard-earned charitable dollars out of communities—and the hands of those in need — is a grave mistake. If this proposal goes into effect, the government would take nearly $16 billion over 10 years that would otherwise go to U.S. charities. This massive transfer of private resources to the U.S. Treasury is at odds with conservative values like limited government and individual freedom. Under no circumstances should charitable dollars be used to pay for Uncle Sam’s out-of-control spending habit.

Senators Steve Daines and Tim Sheehy should take a stand against this harmful proposal and work to improve it, on behalf of all organizations doing important work to support communities in Montana. If they don’t, charities could lose much-needed funding that supports everything from educational opportunities to care for our nation’s veterans and their families.

Let’s be clear: The government simply does not know how to invest charitable dollars better than the hardworking, generous Americans who earned them. This is especially true of the federal government in Washington, D.C., which operates far from the people of Montana and the challenges they face.

In contrast with a government that cannot and should not attempt to meet all the needs of America’s communities, private foundations have stepped up — time and again — especially during tough times. As foundation assets have grown, so has their grant-making to the causes and communities they support— creating stability and protecting Americans from the negative effects of economic turmoil and uncertainty. In recent years, U.S. foundations have invested well over $100 billion annually in charitable efforts, and the beneficiaries are countless.

The people of Montana need to be able to keep more of their hard-earned dollars. We must extend the 2017 tax cuts, but without this tax increase. A tax hike on foundations undermines the goal of true “tax relief” by devastating charitable giving and the millions of Americans who rely on it. They are the ones who will be hit the hardest — from Montana to the rest of America.