Reductions in Tax Incentives Potentially 'Devastating' to U.S. Healthcare

John Commins, March 21, 2011

Lingering uncertainty over the sweeping healthcare reforms, federal and state budget cuts for social services, and trimming tax breaks for charitable giving as part of a deficit reduction strategy could severely impact nonprofit healthcare providers, a new survey from the Association for Healthcare Philanthropy shows.

"Combined with growing state and federal cuts in funding for social services and uncertainty over implementation of the Patient Protection Act, these draconian tax proposals—if enacted—add up to a triple threat to America's not-for-profit healthcare providers," said AHP President/CEO William C. McGinly. "This is not the path to take as we recover from the recession."

President Obama's proposed 2012 budget caps charitable deductions at 28%, while a Bowles-Simpson Deficit Reduction Commission proposal would reduce the tax incentive for charitable giving to a 12% tax credit for donations that exceed 2% of a taxpayer's adjusted gross income.

Nine out of 10 AHP respondents surveyed in February said the Bowles-Simpson proposal would cause significant reductions in overall giving to their organization, with 64% saying the adverse impact on major gift-giving would be considerable. About 40% said giving would fall between 10% and 30% if significant changes are made to the current tax incentives for charitable donations—which conservatively could amount to more than a $1.07 billion drop in total annual giving to nonprofit hospitals, AHP said, based on its own FY2009 statistics.

AHP Chair Mary Anne Chern said any reductions in the tax incentives for charitable giving could be "devastating for healthcare in the U.S."

John Commins

John Commins is a senior editor at HealthLeaders Media.

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