Does Trickle-Down Economics Benefit the Nonprofit Community?
Talk about trickle-down economics. Providence Journal business columnist John Kostrzewa on Sunday argued that Rhode Island needs to give its wealthier citizens and corporate community tax breaks so that they’ll have more to give to the state’s nonprofits.
… [W]hile the number of nonprofits continues to grow in Rhode Island, the constraints are hampering their ability to raise enough money to pay for the help they provide.
The struggle is on several fronts.
The slowdown in the economy, plus rising food and energy costs, are leaving people with less money to donate. …
Then there’s Rhode Island’s business and tax climate, considered among the most burdensome in the country. It is driving wealthier Rhode Islanders, especially retirees, to tax havens, such as Florida and New Hampshire, with no income tax and laws that allow them to keep more of what they earn. That leaves fewer people here to tap for donations.
On top of all that, state and federal budget cuts have already reduced money for nonprofits. It will get worse as Rhode Island lawmakers try to find money to cover massive budget deficits. More cuts are coming just as the demand spikes for services for people caught in the slumping economy.
I can’t recall hearing this argument before. What’s usually promulgated is that upper-echelon tax breaks allow the wealthy to spend more, which boosts the economy, which benefits those of us holding on to the lower rungs of the ladder. (That theory was famously described, not flatteringly, by a certain someone’s father as “voodoo economics.”) While I’m very sympathetic to the plight of the Ocean State’s nonprofits, I find it distateful at best to use their struggles to make the case for easing the tax burden of its wealthy.
What about you? Do you think tax breaks for the rich benefit nonprofits? Or is Kostrzewa simply using nonprofits as a political tool? | 501(c)
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