By Gretchen Millich, WKAR News
http://stream.publicbroadcasting.net/production/mp3/wkar/local-wkar-976406.mp3
East Lansing, MI – The controversial changes in Michigan's tax code this year didn't sit well with many people. They aren't happy with Governor Synder and the Republican-controlled legislature, who gave businesses a nearly $2 billion tax cut, while eliminating a tax credit for the working poor and a tax exemption for pensions.
Cutting business taxes was the centerpiece of Snyder's plan for encouraging economic growth in Michigan. To make that happen, a lot of tax incentives were cut, including a tax credit familiar to many public radio listeners.
AUDIO
If you've ever listened to a public radio fund drive, you've probably heard us say something like this.
(Voice of Curt Gilleo, WKAR Radio station manager): "Keep in mind that your contribution is tax deductible. It qualifies for up to a 50 per cent credit on your Michigan return. That's pretty rare in states, and the full amount of your contribution comes to us to pay for programming on WKAR."
It's called the "public contributions credit". It allows a tax credit equal to 50 percent of the amount of the donation, with a maximum credit of $200 for a joint return and $100 on a single return. It includes donations to state colleges and universities, public libraries, museums and public broadcasting stations. In 2009, more than a quarter of a million Michigan taxpayers took advantage of the credit, recouping close to $24 million dollars. But all that's about to end.
Michael Walenta is president of the Michigan Association of Public Broadcasters and General Manager of WGVU in Grand Rapids. "I think it's unfortunate for all non-profits that are affected by this, not just public broadcasting, but we are the only state in the country that has enjoyed this for public broadcasting," says Walenta. "Forty-nine other states have not had this; we've been fortunate to have it for so many years and we're thankful for that, though it's unfortunate that it's going away."
Walenta says his station is letting members know that if they contribute this year, they can still take advantage of the tax credit one more time. "What kind of impact it's going to have after that is really tough to tell, but I don't think it's going to take the typical donor and cause them to be a non-donor." he says. "I just think it's going to cause them not to round up that pledge. If there was a reason for them to give $350, I think they're not going to round it up now to $400 to maximize that tax credit."
Walenta says people don't contribute to public broadcasting or any non-profit just to get a tax credit. They give because they're passionate about the mission of that non-profit.
Bob Groves agrees. He's Vice-President of University Advancement at Michigan State University. Groves says while a tax credit can make a charitable gift more affordable, it's not what motivates people to give. "Michigan State University receives gifts from over 110,000 people a year," says Groves. "Many of those gifts are modest: $25, $50, $100. Some are very, very substantial in terms of millions of dollars. They're all important, they're all meaningful, but the credit was capped. It was $100 per individual and $200 per couple. So when you put that into the mix of things, the dollar impact on the university is probably not going to be tremendous."
Governor Synder pitched his tax reform proposal as a means of streamlining the tax code to make it, in his words, "simple, fair and efficient." He says it was necessary to eliminate a number of tax credits for donations to non-profit organizations to help balance the budget and give tax breaks to small and medium-sized businesses.
But Groves believes that eliminating those tax credits sends a message about what our society values. Our tax system and the decisions we make with public dollars represent what's important to us, and he says the message here is that we no longer encourage philanthropy. "Philanthropic support for all things; whether it's soup kitchens, secondary education, higher education is very important to our society," he says. "We benefit tremendously from voluntary philanthropic support. We're able to do many things in this country and drive innovation and change because people make those kinds of gifts. Having the structures that support that, that reinforce that message, I think, are good for society."
The new tax law takes effect January first. That means donors have until the end of this calendar year to get a tax break for contributing to their favorite charity or non-profit.