The Elephant in the Hall! – Prepared to be Deducted!

The disarray that is the orchestra world may pale into comparison to what potentially may happen to nearly all arts organizations if we don’t prepare for what the evidence suggests is coming.  The arts could be gutted as a result of this election, and it’s bigger than eliminating the NEA, much bigger…. 

Mitt Romney is loudly saying that he will cut the NEA, and all subsidies to PBS (and everything else he “likes”).  Isn’t it obvious that tax deductions for donations to arts organizations are also going to be targeted if he wins?  The Arts are in the direct line of fire, and there is strong evidence to suggest this.

To be clear I am not in the business of proclaiming that Republicans don’t like the arts.  It’s not true.  For example people forget that during Clinton’s Presidency NEA funding went down almost every year and during the Bush (W) presidency it went up every year except his last.  Once you look past any inflammatory rhetoric on the extreme right about the arts having no value, there is an underlying conservative philosophy that philanthropy is how things should be funded by “the public” i.e as a choice to do so, and not part of the tax base .  Let’s face it, we certainly wouldn’t survive without philanthropy and we can’t publicly demonize Republicans which would run the risk of alienating audiences, donors and boards (the majority of whom are conservative in my experience).  However something is really troubling with Romney not announcing in advance what deductions he will eliminate in order to give the larger tax cuts (20% across the board).  Philanthropy only thrives because of the tax deduction incentive.  Here is what I believe to be proof that we need to worry that these deductions might disappear or be severely curtailed.

In this Huffington Post article by Amanda Terkel, she tries to get specifics from lawmakers about which deductions will be cut by congress.  Romney has essentially given them the green light to make those cuts if he’s elected:

Sen. John Thune (R-S.D.), walking around at the Conservative Political Action Conference here on Thursday afternoon, said that if he had his way, Congress would wipe the slate clean and then decide which deductions to put into the tax code, rather than deciding which ones to keep.

“I would do away with all of them and start with what the rates would be. … And then decide, OK, do we want to have a deduction for charitable giving? Do we want to have a deduction for mortgage interest? And then as you add those things back in, obviously you have to raise the rates accordingly,” he told HuffPost. “I think that’s the best approach to it.”

It is a worry, and whilst there is no specific mention of the Arts, this next excerpt comes closer:

Rep. Steve Pearce (R-N.M.), also at CPAC 2012, said he was looking forward to sitting down with Democrats and hammering out fixes to the tax code. He pointed to the deduction for luxury skyboxes as one he’d be open to getting rid of. Right now, corporations that purchase such suites can deduct up to 50 percent of their cost, as well as the cost of refreshments.

Can the same not be said for corporate sponsorships for concerts, theater productions, exhibits etc…that they will be seen similarly as a luxury item that should not be accepted as a deductible expense?

The evidence is much more prevalent with the candidate himself.  This Washington Post article  explains simply the anomaly of Romney’s deduction for his charitable contributions and how his taxes remained over 14% of his income:

Romney did that by not taking full advantage of his charitable deductions. In their joint return, he and his wife, Ann, listed $4.02 million in donations to charity last year — nearly 30 percent of their income — which substantially reduced their tax obligation. They claimed a deduction for only $2.25 million of those contributions.

Many believe that he did this to show a 14% tax rate.   I  believe it is him telegraphing that the maximum deduction he will propose if he’s elected will be about 50%, using his own 2011 tax return as the example.  If that is the case, and in the future there is a possibility that people will only be able to write off around 50% of their charitable contributions (the one’s congress keeps), then that will make a huge difference in what people will be willing to donate.  If he leaves certain health and human service contributions at 100%, then that will be a catastrophe for the arts organizations relying on donations i.e all of them!

This might seem very speculative, but along with the policy position of eliminating the NEA, again an again Romney talks about limiting tax deductions and loopholes, and as funny as the Firing Big Bird memes are, we need to get serious in trying to get some specifics so we can prepare just in case he wins, and the arts are one of those deductions, he deducts!