While the nation did not hurtle over the so-called fiscal cliff (the combination of mandatory budget cuts and tax increases), thanks to last minute action by Congress and the President, it is fair to say we’ve all slouched over the cliff. Little has been resolved and so big fights over taxes and spending will recur, starting in just a few months. With so little positive action resulting from so much fighting, economic activity may remain stalled, and there will be continued great need for social services coupled with low government income and declining charitable donations to pay for those needed services.

The good news: despite a great deal of talk about a variety of means to cut back the federal tax break for charitable donations, only relatively small changes in charitable giving incentives were made (limits on deductions by higher-income taxpayers). And private school advocates say that hidden in this “complex and dense law” are two helpful small measures for schools.

But let’s not celebrate. What else is hidden in the many pages that law-makers hardly had time to read before they voted?

Moreover, because federal spending continues to far outstrip federal revenues, Congress and the administration will continue to look longingly at the additional revenue the Treasury might reap if the charitable giving deduction was restricted or eliminated.

A much better solution than weakening this federal incentive to people to give their own money to charities: the federal government should cut back the services it provides and finances. Some services can better be provided by private organizations that are funded by private donations. Reversing the trend to ever-more government-provided and government-funded services is one important way to protect religious freedom and to enlarge diversity in our society, for the more the government is involved, the more uniform and secular the services must become.

Read more:

Evangelical Council for Financial Accountability: “Charitable Deduction Survives ‘Fiscal Cliff’ Negotiations.”

Alliance for Charitable Reform: “Legislative Update: Fiscal Cliff Deal Reached.”