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The recently enacted tax cut legislation has gotten a lot of attention—rightfully—for how it lavishes permanent benefits on huge corporations and the super-rich while tossing minor and temporary tax cuts to the middle class. But other features of the legislation deserve far more attention: the massive increase in the standard deduction, and the plan to tax university endowments.

It has long been a staple of conservative argument that we don’t need huge government welfare programs because private charities can meet the needs. As inadequate as private charity really is for meeting the real needs of millions of Americans, it is still true that Americans donate far more generously to charity than do most Europeans. Europeans are more likely to expect their governments to step in to meet such needs out of regular tax revenues. Indeed, American conservatives have typically cited this as one of the ways in which the United States is better than Europe.

With the new tax law, Americans will be specifically discouraged from donating to charity because they’ll get the same standard deduction whether they donate or not.

But with the new tax law, Americans will be specifically discouraged from donating to charity because they’ll get the same standard deduction whether they donate or not. Since American conservatives say they are all about shrinking government, it seems counterproductive—even contradictory—to shrink the major alternative to government programs.

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The new law also establishes a tax on the largest university endowments. These funds are the result of decades or centuries of prior charitable giving on the part of wealthy alumni and friends. Spending from endowments is the major way in which universities provide financial aid to students who could not otherwise afford to study there. Conservatives are prone to insist that we don’t need to keep pumping public money into state universities because private universities can provide a better education without burdening taxpayers. Yet this provision undercuts precisely their ability to do that.

Both of these provisions of the new tax law amount to conservatives shooting themselves in the foot in their haste to pass the bill without any hearings and in nearly complete isolation from the cautionary voices of those most directly affected. The entirely predictable result will be weakening private charities in general, and universities in particular.

When there are needs to be met, such as health, housing, or education, it will now be even more necessary to turn to the government to meet them. You’d think the people who wrote this thing were a bunch of raving socialists.

john peeler

John Peeler

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