By Forrest Berkley
May 4, 2020 at 5:00 am ET
Americans rise to challenges with generosity. As the nation faces a sea of red ink and is reaching for relief, Congress needs to harness that generosity with a universal 50 percent tax credit for contributions to coronavirus aid made to local, state or national nonprofits. This will cut costs to taxpayers, reduce suffering and save lives.
Using tax credits to encourage individual generosity to address crises is a proven strategy. In response to Hurricane Katrina in 2005, incentives for giving spurred $11 billion of additional donations. Congress in 2017 incentivized donations for other hurricane victims as well.
The recent CARES Act provides some incentives for giving, but they are insufficient to address the unprecedented scale of the crisis we face. It will take relief efforts funded by Americans of every income level to address the suffering and economic dislocation caused by the coronavirus epidemic.
Congress should encourage all Americans to contribute to fight the devastating impacts of the pandemic. A universal 50 percent tax credit for all Americans will inspire donations focused on the crisis, saving tax dollars by delivering $2 of relief for $1 of government spending. By contrast to the CARES Act, which limits the tax credit to 40 percent for high-income taxpayers who itemize, and caps donations for all other taxpayers at just $300 per person, a universal tax credit will draw critical resources and supporters to the challenges posed by the pandemic.
Because the tax credit is only 50 percent, unless the government’s actions are more than twice as effective as the local initiatives, this proposal would actually save the government money, and thereby benefit all taxpayers. Local municipalities, nonprofit organizations and faith-based groups with deep on-the- ground knowledge are struggling heroically to respond to the crisis. These individuals and local institutions are clearly best placed to identify local needs, including who is suffering most from the pandemic. They can act swiftly and effectively in our national interest.
COVID-19 claims victims from all walks of life, but it poses the starkest challenges for the poor. We Americans are the most generous givers in the world, a tradition we should support in this time of social distancing, hoarding and distrust. The coronavirus pandemic presents an unparalleled opportunity for Congress to mobilize charitable contributions against the devastation. A broad-based 50 percent tax credit for all Americans will alleviate suffering by inspiring donations while saving tax dollars.
America’s network of public systems — including education, health care and the laws and regulations that promote economic growth — all depend on cooperation between government and the nonprofit sector. We are all beneficiaries of that interaction, with millions of narratives of this uniquely American experience. At this time, we need immediate and innovative ways to spur citizens to help those in the greatest need.
The scale of this crisis requires that Congress harness American generosity and demonstrate that not even a pandemic can defeat us. Millions of Americans want to help. Let us share 50-50 with our government to help our neighbors in desperate straits.
Forrest Berkley serves on the Board of Save The Children and the Independent Board of the TIAA-CREF mutual funds.
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