Income Tax Credit Plan Fuels Debate

A proposal that would grant generous Pennsylvania state income tax credits for donors to certain charities has heightened the debate over how government provides for those who cannot provide for themselves.

Amid rollback of the nation’s welfare system, help for the poor now comes from state government and the state’s nearly 26,000 charitable organizations with priorities that do not always mesh.

The state bill, now before the finance committee of Pennsylvania’s General Assembly, would provide credits for contributions to groups that use no less than 75% of their budgets to directly serve the poor and receive no more than 50% of their funding from the government. The change would not affect charitable deductions on taxpayers’ federal income tax.

Food pantries and homeless shelters that rely on volunteer help would qualify. But other charitable groups, including churches and even the United Way, cannot meet the 75% threshold because helping the indigent is only part of much broader missions. The United Way, for example, helps not only the poor, but also alcoholics, drug addicts and the mentally ill.

Lutheran Church leaders already have spoken out against the bill, saying it will undercut collaborative efforts to fight poverty. Church leaders also worry that the tax credit could dissuade worshipers from dropping money into Sunday’s collection plates. Those proceeds go not only to help the poor, but also to pay clerical salaries, maintenance and other things.