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With the President’s American Jobs Act, or at least elements of it, still very much up for debate, arts groups and other non-profits remain dubious of his plan to off-set its cost through changes to charitable and other deductions. The American Job Act is estimated at $447 billion to enact, while the Presidents hopes to offset some $400 billion of the cost, over ten years, by limiting the amount that families who gross more than $250,000 a year can write-off at 28 percent. The current rate is 35 percent.
As the Washington Post wrote last month, arts groups in particular are concerned about this plan, as they have already felt a pinch from the economic downturn, and the prospect of a double-dip recession looms. Giving to non-profit arts fell 2 percent last year, even as giving in general rose by 3.8 percent. Economic conditions have increasingly shifted charitable giving to those groups that offer basic services, such as health-care or nutrition.
There is not yet consensus about how much these tax changes would affect the arts, with some even claiming that the wealthy would continue to contribute regardless of taxes. In addition, the President’s proposal would not impact those with gross earnings of less than $250,000. However, Harvard economist Martin Feldstein estimates that such a plan would reduce charitable giving by approximately 10 percent. For a non-profit arts world that has already had to endure serious budget cuts, such a reduction would be devastating.
Still, it’s important to note that the jobs plan has many attractive features to the non-profit arts world. Americans for the Arts President Robert L. Lynch is interested particularly in the payroll tax cut, which could lead to increased hiring in arts and arts education. Still, he emphasizes this is not the time to threaten investment in the arts. “The economy is made better by money flowing into the American arts economy” said Lynch. Read the full article here.