Exempt Donated Labor on Taxes the Same as Cash Contributions

ACORN Citizen Wealth Financial Justice

New Orleans   Following all of the discussions on reforming the income tax system isn’t easy, especially since much of the time the people saying they are for reform and closing the loopholes really aren’t and sometimes the people saying they aren’t for reform, really should be.  Confused?  Yes, me too!

I stirred the pot a couple of months ago by saying that, hell yes, the exemption for donations to nonprofits for the rich should be capped out, just as the Obama Administration had argued, and that some of the so-called leaders of the fight to prevent changing the exemptions, especially the Independent Sector’s Diane Aviv, did not represent anyone but the mega-nonprofits and the rich, certainly not the rest of us.

I want to go one step farther.  I want regular people who are not rich as Croesus to be able to deduct their contributions of labor, given freely, to qualified nonprofits on their federal income taxes, the same way the bottom sitters and their accountants do with the flick of a wrist on their checkbooks.  Fair ought to be fair, and the fact that working people and many others give “sweat equity” should, if anything, mean more than the big ticket, name-on-the-buildings checkbook crowd.

I’m sensitive to this especially now that I have what I call my “volunteer and intern army” that powers so much of the research and communications work of ACORN International.  Sometimes when they are students, they get some course credit for community service, but often they do not.  Most times they want to help out, and often the help is huge.

Mardi Gras day a fellow named Vince Sellen and his wife, Gretchen, knocked on the door of our house and came in for a bowl of jambalaya and a sip of Texas spirits.  They are from near Seattle.  He’s a retired teacher.  Starting in 2006, one year after Katrina hit and straight through 2010, Vince would come down and volunteer for a couple of months every year, usually in the winter and into the spring, to help ACORN and then A Community Voice on hurricane recovery efforts doing a little bit of everything.  His help was invaluable!  He told a story this year that I loved about wearing his ACORN hurricane recovery t-shirt to the Zulu parade and being showered by coconuts, which is the only reward he ever received.  For all of the thousands of dollars worth of labor he donated, even if calculated at minimum wage, could he claim a deduction for that gift on his taxes? No!  That’s not right.

Garrett Reynolds was a union tradesman for the City of Santa Barbara.  He and a buddy who ran a bar in town spent three years building a mobile biodiesel rig that could produce up to 20,000 gallons of diesel fuel from grease, coffee grounds, and all manner of mischief.  They spent more than $20,000 out of their own pocket on the trailer and the pieces and parts required to build the rig.  I got a call from them several years ago.  They had decided Santa Barbara was not the right place for their fabrication, but New Orleans was.  My nephew, C J Butler, drove to Santa Barbara and my son, Chaco, flew out to meet him, and they hauled the rig back down to New Orleans more than a year ago.  For all of the hundreds of hours Garrett and his buddy spent building this beautiful machine and the hours spent driving it back that CJ and Chaco spent, the only thing that any of them could claim for their huge gifts were the out-of-pocket costs for the materials.

I could go on and on with stories like this all day and all night long.  Studies show over and over that low-and-moderate income people give are more charitable donations as a percentage of their income than any others, but their benefits are all from “the good of their hearts.”  Regular people, working people give invaluable labor to nonprofits.  Is it right or fair for them to not be able to claim any part of these gifts, while the rich claim and get credit for every penny?  I think not.

Once we start talking about reform, let’s cap the value of donations for the rich, but let’s also give some credit for the gifts of labor from the rest of us, which are part of what really make nonprofits grow and succeed.