The 2017 Tax Act, passed by the Republican majority in Congress and signed into law by President Trump, has had a number of unintended consequences as well as strongly negative effects that weren’t clearly articulated at the time of passage. In particular, the nonprofit sector has been hit hard by financial and administrative burdens that have interfered with the ability of the charities to pursue their missions in the fields of health care, education and other human, religious and cultural services.
The Tax Act decreased incentives to donate to nonprofits because of the large increase in the standard deduction, while increasing administrative costs, imposing new taxes on nonprofit employee fringe benefits and excluding nonprofits from the new family and medical leave tax credit.
While the stated intent of some recent legislation has been to level the playing field between nonprofits and for-profit entities, the outcome of the Tax Act is that new burdens are placed on resource-strapped service providers. If Congress does not undo these harms, many nonprofits will be forced to cut back staff and services, and some may have to cease operating. The full effect on the sick, disabled, young and disadvantaged who depend on nonprofit services is incalculable, but this report outlines the dimensions of the new obstacles that have been placed in the way of Americans devoting their lives to keeping their neighbors healthy and whole.