What effect will tax reform have upon local congregations, denominations, and religious organizations?

The Tax Reform Act of 1969, passed by both houses of Congress on December 22, contains a number of provisions which have a direct bearing upon income for religious causes. President Nixon signed the bill into law on December 30.

The bill’s possible impact upon the churches was considered to be especially significant now that some religious groups are reporting significant declines in income. Here is a rundown on specifics in the tax reform measure as they relate to charitable giving and as they were finally agreed upon in the conference report which Congress approved:

On the broad scale, individuals, including contributors to churches, get more take-home pay. The 10 per cent income tax surcharge was to be reduced to 5 per cent as of January 1 and eliminated by July.

People willing and able to give substantial sums to charitable causes get more incentive to do so with the raising of the ceiling for regular charitable deductions from 30 to 50 per cent. A special unlimited charitable deduction, however, is phased out.

Religious groups that get financial help from foundations may be affected somewhat adversely because foundations now for the first time are called to pay a 4 per cent tax on investment income. This may be offset to a degree by a new provision that requires foundations to pay out to charity at least 6 per cent of their net worth each year.

One highly-controversial tax loophole is closed in the imposition of the 48 per cent corporation tax upon most businesses operated by churches. A number of churches have been borrowing money to buy businesses, then leasing them back to their original owners who no longer had to pay ...

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