Charities Worried by U.S. Tax Plan : Fear Proposal Will Trigger $35-Million Loss in Southland

Southern California charities could lose up to $35 million annually in private contributions, forcing “drastic” cuts to programs for the needy, if the U.S. Treasury Department’s tax simplification plan is approved, directors of United Way and the Jewish Federation Council said Tuesday.

Approval of the tax plan, which would eliminate some tax deductions currently allowed donors, would severely hurt emergency food and shelter programs and other services provided by 300 United Way agencies and other Los Angeles County organizations that rely heavily on private donations, Lou Garcia, executive director of United Way of California, said at a news conference at United Way headquarters.

The approximately $200-million budget of United Way of Los Angeles County consists of $142 million in individual donations, Garcia said. Donations could decline by $35 million if the tax proposal is adopted, he said.

Alice McHugh, senior vice president of United Way in Los Angeles, said the most recently established programs, such as battered women’s shelters and child-abuse counseling, would be the first to be cut.

Without certain tax incentives, the Jewish Federation Council will lose one-third to 40% of its $50-million budget for 1985, said Murray Wood, director of the council’s community relations committee.

“To say the effect would be devastating would be an understatement,” Wood said at the news conference.

The two charities announced that they will begin a letter campaign immediately to President Reagan to protest the tax simplification plan.

The tax plan, as proposed by Treasury Secretary Donald T. Regan, would end the charitable deduction for taxpayers who file short-form tax returns, and would allow those who itemize only to take a deduction for donations in excess of 2% of adjusted gross income.

The proposal also would eliminate deductions on the appreciated value of property gifts, such as stocks.

Meanwhile, Msgr. John P. Languille, director of Catholic Charities, said he does not believe that Regan’s proposal would affect the giving in the Catholic community.

Languille, who was listed as a supporter of the effort in United Way literature passed out at the conference, did not attend the event.

He said Catholic Charities has not decided whether to join United Way and the Jewish Federation Council in opposition to the tax simplification plan.

“They (United Way and the Jewish Federation Council) might be anticipating something that is not going to come about,” said Languille in a telephone interview.

“The motivation for giving is service to your community, not tax incentives,” Languille said, noting that a church-operated family shelter in Long Beach has received in excess of $30,000 in free will donations since it opened in October.

“I believe that if you are doing your job, people will support you,” he said.