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General economic prosperity is a more important driver of nonprofits' financial health than is the charitable deduction. That is the conclusion Kimberly Dennis, the president and CEO of the Searle Freedom Trust, reaches in today's Wall Street Journal. The article's accompanying graphic, which I've pasted below, shows a surprisingly direct and consistent relationship between the top marginal tax rate and charitable donations since 1980.

Of course, that graphic also tells a more general story about America's rising prosperity during those same years. Dennis says that there is a direct relation between the top marginal rate and economic growth. That's surely true, although I'm not sure that in terms of economic growth allowing the top rate to go to 39.6% would be a total catastrophe -- at least, not more of a catastrophe than the one represented by our knee-buckling national debt. But that's a different argument. In any case, nonprofits and their lobbyists -- or, more importantly, their funders -- would do well to consider Dennis's argument with care.

 


1 thought on “Dennis: For nonprofits’ health, lower tax rates more important than charitable deduction”

  1. Paul Bjorklund says:

    Jeremy-

    Thanks for bringing that to our attention.

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