Minnesota nonprofits work to amend federal tax bill

A letter was sent to the U.S. House of Representatives to voice concerns regarding the federal tax bill that would negatively impact charities.

by Kayla Song

The Minnesota Council of Nonprofits collected almost 200 signatures from nonprofits across the state for a letter sent on Nov. 8 voicing concerns about the recently proposed U.S. House of Representatives tax bill.

Fifteen nonprofit community partners at the University of Minnesota have also signed the letter, such as Twin Cities Habitat for Humanity, Minnesota AIDS Project and TakeAction Minnesota. 

The letter was addressed to all Minnesota delegates, and the federal Ways and Means committee. A House vote on the GOP’s tax cut bill is planned for Thursday afternoon.

The bill, which was first introduced by the Republican-led House, outlines how it would significantly raise tax deductions, removing the incentive to give to charity.

If the new bill is passed, the standard amount that individuals can take out of their income is $12,000. Depending on the individual, some will pay more taxes under new proposals, but others will pay less. 

“For the first time in a generation, middle-income and hardworking Minnesotans are closer to a tax code that works for them, rather than against them,” said Rep. Erik Paulsen,  R-Minn., in a statement about the bill.

Individuals can also choose to itemize their deductions, such as donations to nonprofits. But since the tax bill doubles the standard deduction, it is unlikely the total amount will result in less income tax than the standard. 

In the letter, Minnesota nonprofits say the tax proposals “undermine our shared prosperity” and fewer people would donate to programs supporting housing, education, transportation and arts and sciences.

“We wanted to make sure that our members of congress knew our concerns and some priorities we’d love for them to set,” said Rebecca Lucero, public policy director for the MCN. 

Lowering individuals’ tax rates would have them receive less money back on the dollar, said Senior Fellow of the Humphrey School’s Public and Nonprofit Leadership Center, Jay Kiedrowski.

“The individual income tax rates will be lowered, so it won’t be as advantageous for some people even though they may continue to deduct the charitable contributions,” Kiedrowski said. “It won’t be worth as much, because they’ll be taxed at a lower bracket.”

Nonprofit organizations are also concerned about the House tax bill’s elimination of the Johnson Amendment, which prohibits supporting or opposing specific political candidates. 

If the Johnson Amendment is repealed, all nonprofits will face pressure to support or oppose specific candidates as a quid pro quo for government funding or other support, Kiedrowski said. It will be more costly for nonprofits because they’re going to have to spend more money on lobbying.

“If you think about it this way, there may be some conservative churches in the south,” Kiedrowski said. “They’re going to spend money on lobbying for instance for pro-life, so Planned Parenthood nonprofits are going to have to spend more money to try to counter some of what those conservative churches are lobbying for.”

Correction: This article was updated to clarify information about the Minnesota Council of Nonprofits’ letter.