The Tax Cuts and Jobs Act of 2017 slashed the corporate tax rate from 35% to 21% and more than doubled the federal estate tax exemption rate for married couples, from $11 million to $27 million. An analysis by the Congressional Budget Office and the Joint Committee of Taxation found that beginning in 2027, lower- and middle-class families could see a tax increase that would exceed the rate they paid before 2017.
Sadly, the law is set to expire at the end of the year. It would be just awful if America’s billionaires lost the gift that this law gave them; they’ve increased their collective wealth by trillions since the tax cuts went into effect. Thankfully, Congress is in talks to protect these vulnerable individuals.
The current news cycle is saturated with stories about disillusioned Trump supporters finding out what they actually voted for, as they lose jobs and benefits. Not the top 10%, though. They own 90% of all the stocks on Wall Street. They know exactly what they were voting for.
There’s another notable result of the Tax Cuts and Jobs Act: the $20-billion decrease in charitable donations. Part of the reform included changing the standards for a tax write-off for 20% of Americans. That led to fewer dollars being given to charities, many of which help people in need. It is rather telling that the same law that increased wealth by the trillions for the few led to billions being kept from the many.
After the country entered World War I in 1917, to help pay for it President Wilson and Congress introduced Liberty bonds and expanded the federal income tax, which increased the number of people paying to 4 million, up from 500,000. Concerned the tax increase would prevent wealthier Americans from donating, the War Revenue Act of 1917 introduced the charitable donation policy. It wasn’t a loophole that needed closing; it was a door the federal government opened so that Americans were incentivized to still help one another after money got tight.
When President Trump took office in 2017, the economic trend in the country was pointing north. Job participation was above 60%, unemployment below 5%, and wages increased by 2.5% from the year before. That doesn’t mean every American was rolling in cash, but certainly we were better off than the folks in 1917. So why tinker with charitable donations of all things? If the federal government saw fit to encourage people to give in the hard times, why remove the incentive in good times? It would be laughable to pretend that the goal was fiscal responsibility, considering how Trump’s cuts inflated the deficit.
Whatever their goals, it’s definitely conservatives who have the power right now in Washington. Are they really planning on using it to decrease charitable giving? And if they do, will the organizations that depended on tax-incentivized donations suffer?
Earlier this month, the Contemporary Theater of Ohio in Columbus was left in a lurch after Trump’s anti-DEI directive prevented a $10,000 National Endowment of the Arts grant from coming their way. Local businesses stepped up to fill in the gap so the show could go on. That’s one production at one theater. The question is how sustainable the “kindness of strangers” business model will be for nonprofit organizations as a whole in the years ahead if people are not as able to receive a tax benefit.
Recently the Federal Reserve signaled the U.S. could be heading toward a recession. Usually that means layoffs, wage freezes — money is going to be tight. People will be in need. And one of the Trump administration’s first acts, back in January, was an attempt to destroy institutional safety nets.
Without tax incentives, will the private sector meet the nation’s needs? Or will the cuts in donations continue while the wealthiest among us continue to rake in trillions?
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Ideas expressed in the piece
- The article argues that the TCJA disproportionately benefited wealthy Americans, with billionaires increasing their collective wealth by trillions while charitable donations dropped by $20 billion due to changes in tax write-offs[6]. It criticizes the law’s focus on corporate tax cuts and estate tax exemptions, which could expire in 2025, reverting to pre-2017 rates that may raise taxes for lower- and middle-class families[6].
- The author questions the fiscal responsibility of TCJA proponents, noting that Trump-era tax cuts inflated the federal deficit despite initial claims of economic growth[6]. They highlight concerns about reduced charitable giving incentives, which could strain nonprofits that rely on tax-deductible donations during economic downturns[6].
- The piece draws parallels to post-WWI tax policies, contrasting the 1917 War Revenue Act’s intentional charitable donation incentives with TCJA’s reduction of such benefits during relatively stable economic conditions[6].
Different views on the topic
- House Republicans propose extending most TCJA provisions through a $4.5 trillion tax-cut package paired with $1.5 trillion in spending cuts, arguing this would maintain economic growth and simplify tax filing for individuals[1][4]. They emphasize that allowing TCJA to expire would raise marginal tax rates for 62% of filers and complicate the tax code[3][4].
- Supporters of TCJA extensions argue that permanent corporate tax cuts (from 35% to 21%) have made U.S. businesses more globally competitive, with economic models projecting a 1.1% GDP boost and 847,000 new jobs if provisions are renewed[4][5]. They contend that pass-through business deductions and bonus depreciation rules encourage domestic investment[3][4].
- Some conservatives advocate prioritizing border security and defense spending before addressing TCJA extensions, reflecting a strategic divide within the GOP about sequencing major legislative efforts[1]. Others propose offsetting revenue losses from tax cuts with tariffs and reduced federal spending to address deficit concerns[2][4].