Curt Smith: Indiana should pass tax credit for charitable giving

Frustration and disenchantment with government are at all-time highs, polls reveal. So a novel bill to strengthen our social sector to meet Hoosier needs so government can do less is a welcome approach.

Freshman Rep. Hunter Smith, R-Zionsville, has teamed up with veteran Rep. Bob Heaton, R-Clay City, to offer a tax credit to encourage charitable giving to social service providers that are meeting pressing Hoosier needs.

The concept first took hold in Florida, where former Republican House Speaker Chris Sprowls championed the legislation. Florida began with a $10 million credit for corporations and businesses (no personal income tax in Florida). It grew to $20 million and now stands at $40 million.

Texas, where Smith’s brother served as a state legislator until this year, has considered the concept, and reports suggest it is close to passage in the Lone Star State. The path forward in Indiana depends on tax revenue estimates as the Legislature moves toward final actions in April, which is why Smith and Heaton proposed a relatively modest $5 million cap to start here.

They understand tax credits are a powerful public-policy tool, which is why Indiana has more than 50 credits currently on the books.

The bill, House Bill 1565, has drawn support from some of the state’s nonprofit leaders. Jay Height, executive director of Shepherd Community Center on the east side of Indianapolis, serves some of the toughest neighborhoods in our capital city. Ryan McCann, executive director of the policy-focused Indiana Family Institute, takes a statewide focus on legislation. Family First, whose public ambassador is former Colts coach Tony Dungy (and NFL punter Smith’s Super Bowl-winning coach), works in fatherhood engagement in about 125 school systems across Indiana.

All three organizations support the bill and believe it will help Hoosiers begin to replace government services with community-based, “neighbor-to-neighbor” support.

The bill has several safeguards for taxpayers. Organizations applying must provide a narrow range of services. They need 10 years of operations to assure stability and resiliency. The applicants must conduct an annual audit. Finally, only 50% of the gift reduces Indiana taxes. This means donors retain a charitable motive and a sense of investing in an organization’s mission.

It would work like other tax credits by reducing Indiana tax liability. So, a $100 contribution to a qualifying nonprofit leads to a $50 reduction in Indiana taxes.

It operates much like an Indiana credit for universities and colleges. Think Butler, Marian, Purdue and Indiana Wesleyan universities. A $100 gift reduces your taxes by $50.

As noted, Smith and Heaton have been told the bill is a priority as new revenue allows strategic shifts in tax policy, including the $5 million tax cut to state coffers this bill would require.

But that $5 million tax cut results in a $10 million infusion in non-government services, helping to reinvigorate the social sector.

This puts more resources toward the profound problems of fatherlessness and family dysfunction, issues all agree are at the heart of social problems. Whether conservative, liberal or apolitical, we all see the cascade of problems that come from kids growing up without a strong family to guide and nurture them. These problems are evident in teen violence, lack of educational success, drug use, prison overcrowding,
suicide and other mental health crises.

Over time, it is anticipated Hoosiers would expect to see this credit grow as nonprofits and faith-based providers respond to this opportunity.

Florida pioneered this credit several years ago and, as noted, has increased its credit to $40 million. Texas is actively considering a $10 million credit in its current session, and we can all work now to pass this law for Hoosiers.•

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Smith is chairman of the Indiana Family Institute and author of “Deicide: Why Eliminating The Deity is Destroying America.” Send comments to ibjedit@ibj.com.

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