Coburn opposes proposal to sharply limit charitable deduction itemization, Oklahoma Center for NonProfits makes a case, as well
Published: May 10th, 2017
Oklahoma City – Monday, the Oklahoma House and Senate Joint Committee on Appropriations and Budget advanced House Bill 2347, significantly capping personal itemized deductions and back-dating the effective date to January 1, 2017.
The move came as a variety of roadblocks remain in efforts to achieve a balanced state budget, as is required by state law. Notably, H.B. 2347 has garnered harsh criticism from one of the state’s most respected conservatives, and from a non-partisan association representing the state’s NonProfit sector.
In the midst of the wild and increasingly contentious 2017 legislative session, former U.S. Sen. Tom Coburn of Muskogee issued a stirring denunciation of H.B. 2347 and other efforts to increase taxes.
Dr. Coburn has issued the following statement, sent to CapitolBeatOK and other news organizations, concenring the push to advance the bill and get it to Governor Mary Fallin for her signature”
“Efforts to cap itemized deductions in order to increase personal income taxes by $187 million on more than 426,000 Oklahomans directly oppose the promises by conservatives to do the tough work of going line by line through every expenditure of government and to reform government so that it lives within the current tax burden in Oklahoma, especially during a tough economy. These efforts should stop immediately.
“Oklahoma’s economy is hurting due to the recessionary effects of OPEC’s energy price war and stagnant economic growth due to the failed tax, spend, and regulate policies for eight years under the Obama administration.
“Oklahoma policymakers shouldn’t exacerbate Oklahoma’s problems by enacting a tax increase that penalizes the productive behavior of Oklahomans who tithe, have a mortgage, charitably give, pay significant sums of property taxes to support their local schools, and pay for significant family medical expenses.
“Oklahoma policymakers should reject efforts to pass backdoor income tax increases and instead work to eliminate millions in subsidies for out-of-state wind companies, millions in bloat and waste in higher education, millions of tobacco settlement spending on efforts harassing Oklahomans about their health, millions diverted to the build-up of funds for Career Tech buildings and non-classroom spending in common education, millions in rebates for tribal entities selling cigarettes, millions in preferential tax treatment for tribal activity that competes with non-tribal commerce, and millions in administrative overhead exploding in our public schools. Ending these inappropriate spending efforts are all better substitutes than a personal income tax increase of $187 million on 426,000 Oklahomans.
“I urge Oklahomans across the state to make your voices heard over the throng of lobbyists, special interests, and tax consumers who are inundating lawmakers with the rhetoric that the sky-is-falling and you must pay more in taxes—and urge your lawmaker and the Governor to oppose HB 2347 and any efforts increasing personal income taxes on Oklahomans.
“I urge lawmakers and the Governor to reject the rhetoric of lobbyists, special interests, and tax consumers and fulfill their campaign promises to protect taxpayers.”
Two other well-known pro-business and free market leaders, Larry Parham and Jonathan Small (board chairman and president, respectively) of the Oklahoma Council of Public Affairs (OCPA) issued their own criticisms of H.B. 2347 in a release earlier this week (http://www.www.capitolbeatok.com/reports/ocpa-says-move-against-itemized-deductions-reflects-focus-on-the-demands-of-government-agencies).
Meanwhile, members of the Oklahoma Center for NonProfits say they are reeling from the anticipated impact of H.B. 2347, if enacted.
In a release the morning on May 10 (Tuesday), the group said the measure “will irreparably harm the charitable sector by placing an artificial cap on charitable deductions. The bill is scheduled to be heard in the full House TODAY at 1:30 p.m.
The group encourated members and concerned citizens to encourage a “no” vote on the legislation. In its press release, the center asserted, “Currently, Oklahomans receive the same itemizations as their federal tax return. This cap at $17,000 will disincentivize giving. We need our nonprofits, philanthropists, foundations and corporate donors’ voices to be heard. Don’t let the Oklahoma Legislature balance the budget on the backs nonprofits and the people we serve.”
Marnie Taylor, president and CEO of the center, said in a prepared statement, “At a time when nonprofits are asked to do more and more with fewer resources, the Legislature’s proposal to cap itemized deductions that include the charitable giving deduction will choke off funding from our donors. Charitable giving is the lifeblood for nonprofits, and we know that 12 percent of all charitable giving comes into nonprofits in the last three days of the year. This just shows that the charitable giving incentive is important to Americans and to Oklahoma donors.
“We feel very strongly that we should not continue to balance our budget on charity – either by shifting the burden to nonprofits or taking away the very incentives that encourage people to donate to charity. The optics of this are terrible for Oklahoma. This happened in Hawaii a few years ago, and they ended up reinstating the charitable deduction just two years later because it was such a disaster. I know that our Legislature can find better ways to increase revenue to support core services without damaging the charitable sector that fills the ever-increasing gaps in service.“
The gist of the center’s position, circulated in a Monday statement, is this: “The tax laws in many states encourage individuals to give to charitable organizations whose missions they support by providing an itemized deduction or tax credit. Tax reform efforts in recent years in some states have sought to cap or eliminate charitable giving incentives. Reduction or removal of charitable giving incentives threaten the ability of nonprofit organizations to serve people in need and to continue to strengthen work in communities.
“Limitations on state charitable deductions and other giving incentives effectively remove motivations for donations to churches, domestic violence shelters, early childhood programs, food banks, school alumni groups, and all other charitable nonprofits, and would further reduce the ability of charitable organizations to meet the increasing need for services in their communities.”
It has been a stormy week at the state Capitol, with collapse of a possible $400 million “revenue enhancement” embedded in dueling denunications of notable rhetorical ferocity from Senate President Pro Temp Mike Schulz, R-Altus, and House Minority Leader Scott Inman, D-Del City, and news that total government continued to fall short of projections (even as gross receipts to the Treasury gained ground). Whether or not Coburn’s strong statement calling on Republicans to stick to their low-tax and budget-trimming agenda has the effect he desired, his comments have provoked soul-searching among Republicans, and some Democrats, as the showdown over itemized deductions looms.