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Mon November 7, 2011
Michigan's charitible giving tax credit expires at the end of the year
(*Editor's note - Michigan Radio, as a licensee of the University of Michigan, benefits from this tax credit)
The Michigan charitable giving tax credit expires at the end of the year, and charities are expecting the amount people donate to charities to drop as a result.
The charitable giving credit was ended as part of Governor Snyder's effort to pay for a business tax cut of more than $1.5 billion.
The credit allows Michigan taxpayers to essentially double their contribution when they give to community foundations, homeless shelters, food banks and public institutions (such as Michigan universities, museums, public libraries, and public broadcasting stations).
For a single filer, half their contribution can come off their Michigan tax bill up to a $200 contribution. Joint filers can take half of a $400 contribution.
Brian Conner of the Detroit News wrote a piece on the expected effects of the credit's expiration.
Conner writes that charities in Michigan don't quite know how much of their donations are tied to the credit, but the expect to take some kind of a hit.
Robin Ferriby, the vice president of philanthropic services for the Community Foundation of Southeast Michigan was quoted:
"Studies have shown that people give to charity because they care about the cause, but tax policy influences how much people are able to give," Ferriby said. "We anticipate that with the loss of the tax credit, people will give to charities they've supported in the past, but they will give less because it costs them more."
Charities also fear loss of the incentive could keep people from making first-time donations that often turn into continuing support, noted Tracy Muscat, associate vice president of development at Wayne State University.
Connor notes that foundations and universities fought to keep this credit, but their cries were lost in battles over other tax issues - such as the film credits, the pension tax, the earned income tax credit and the historic preservation tax credit.
To pay for the tax cuts to businesses in the state, Governor Snyder and the Michigan legislature shifted the tax burden to individual taxpayers, Connor wrote.
The upshot was elimination of exemptions for the elderly and children, cuts to school aid and homestead tax credits and less money for universities, community groups and cultural institutions, as well as ending a slew of tax credits that included the charity write-off.
Charities are reminding people that the credit ends at the end of the year in their effort to drum up donations.