Love and taxes: Solving the contradiction

How to support the arts and thumb your nose at the new tax bill

Today’s subject is the contradiction between Oregon’s obvious love for the arts, and our tepid support for them at the state level. Well, actually the subject is how you and I, dear reader, can help solve that contradiction.

It’s especially important this year, given the tax bill that was signed into law last week. That bill will eventually double the standard deduction that most Americans take, and that will make it less likely that we will itemize. You know where I’m going with this: Unless you itemize, you don’t have the tax incentive to give to charities. And the only taxpayers who will now itemize, especially now that the deduction for state income taxes and property taxes have been limited, are very high-income earners. “The biggest change is expected to be among households earning $75,000 to $200,000 a year — a bracket in which more than half of filers itemized their taxes under the old code,” according to a Washington Post analysis.

The bottom line: If you itemize now, but probably won’t itemize in 2018, then this is the last year to take a charitable deduction of any kind. You can keep giving—no one expects private philanthropy to dry up completely—but your tax incentive will disappear. And an Indiana University Lilly Family School of Philanthropy study, cited by the Post, is predicting a 4.5 percent drop in giving in 2018, which would be about $13 billion.

Albert Robida, “A night at the opera in the year 2000,” cartoon, 1882

Most arts organizations in Oregon are nonprofits, and they depend on philanthropy for their existence (either direct giving or through foundations), along with ticket sales and government support. This solution to the problem of supporting the arts starts with the Oregon Cultural Trust, and then, for this year at least, involves a change in giving patterns by individuals. Stick with me: We can do this!

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Just for an update, the glorious State of Oregon ranks 35th in funding for the arts through its arts agencies, the Oregon Arts Commission and the Oregon Cultural Trust. That’s a little weird. The state always ranks near the very top in attendance at its arts events. You would think, all things being equal, that we’d be happier to support the arts than most other places.

That’s not the case. I’m going to focus on the states that start with the letter O for a moment, a universe of three states. According to the complex calculations of the National Association of State Arts Agencies, Oregon state government spends a grand total of 84 cents per state resident on the arts. Let that sink in a moment. Eighty-four cents. A grand total of $3,422,588.

Now, I hear people complain about government support for the arts a lot, but complaining about 84 cents is complaining about nickels and dimes. Actual nickels and dimes. And pennies. Even if you’re ideologically opposed to giving to the arts (and I’m sure those folks have clicked away from this story already), there are much bigger targets around for your slings and arrows. (For the record, I think the same thing about people who complain about the arts tax in Portland. That $35 is going directly toward something we actually voted for—arts education at the primary school level and support for our non-profit arts organizations. But that’s another story.)

Back to the O states. The other two are Ohio and Oklahoma. Ohio is a much bigger state, and during the 20th century, it was one of the nation’s richest, home to very large national corporations, from Procter & Gamble and Kroger in Cincinnati to Goodyear Tire and Rubber Company in Akron. It’s still an industrial center of major national importance, but its per capita income has slipped below Oregon’s. We’re 26th nationally, at $54,148 per household. They are 34th, at $51,075. Still, they are ahead of us in state funding for the arts: They spend $1.39 per capita, and a total of $16,173,750.

Oklahoma is more our size, and for much of its history, its wealth was built on an extractive industry, just like ours—oil in their case, timber in ours. The average household income in Oklahoma is $48,568, which ranks 39th nationally. So, they give less of their state budget to the arts than we do, surely? Uh, no. It’s close, but they contribute 99 cents per capita to their state arts agencies, which ranks 26th nationally. Among the O states, Oregon is last.

Some might say this is a brilliant economy of resources— we invest little and get a lot. Unfortunately for us, among the O states Oregon is most dependent on its creative economy—the design, tech, new knowledge companies that drive our economy now. And the arts are crucial for attracting the talent that sharpens the edge of those companies and for keeping them engaged with their creative side when they get here. We can’t afford to be pennywise and pound foolish.

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Fortunately, the Oregon Cultural Trust allows us to rectify an ongoing error of the state legislature—in this case its reluctance to fund the arts sufficiently. The beauty of it is, it doesn’t cost us any money. And though it’s been around for awhile now, many of us don’t take advantage of its unique provisions. Many do: Oregonians invested more than $4.55 million in the Oregon Cultural Trust in 2016, after all. For good reason: It distributes money to every corner of the state, and funds tribal and historical organizations as well. So, if you’re taking advantage already, this is just a refresher.

The process isn’t hard, but it does involve a few steps. And the subject of taxes makes my head swim, my eyes blurry and my knees weak. That’s why I’m sure that if I can do it, so can you.

  1. It starts with a gift to one or more of the 1,400 or so arts and cultural groups in the state. You can find the list of qualifying groups on the Trust’s website, though nearly anyone you can think of qualifies.
  2. Make a matching gift to the Cultural Trust. You can do it online. You will be provided with a confirmation screen you can print for your records to claim your tax credit. Or you can donate by telephone (503-986-0088).
  3. Claim your entire contribution to the Trust as a tax credit on your Oregon income tax—up to $500 for an individual, $1,000 for couples filing jointly, and $2,500 for corporations. Much of that money will be distributed to Oregon arts groups directly, and some will go to the Trust’s permanent fund.

Let’s compress that: You gift your favorite arts group(s), you give to the Cultural Trust, you take a tax credit for the gift to the Trust (and to the arts groups), you enjoy great art the rest of the year.

Not so hard, is it? Ohio and Oklahoma, we’re coming for you!

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OK, one more idea. Take a look at Step One: The original gifts to arts organizations. Although the limit on the Oregon Cultural Trust tax credit is $500 for individuals and $1,000 for couples filing jointly, you can still take the federal income tax deduction on any larger amount. At least you can take it THIS year, if you itemize. But let’s imagine next year. It’s entirely possible that you won’t be itemizing on your 2018 tax return, which means you won’t get a deduction for your charitable contributions (to arts groups or anyone else). Bummer.

That’s why it’s a good idea to give the money you WOULD have given in 2018 now, in 2017, so you can take the tax deduction now. Instead of giving Oregon ArtsWatch $100 this year—just an example!—you could give us $200, and take the full tax deduction this year. We would be much obliged to help in this way. And it would work the same way for any charitable contribution: This is the year to double up and guarantee that you get the deduction.

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So, right, this column is self-serving. Oregon ArtsWatch is one of the organizations on the Oregon Cultural Trust’s list. You can donate to us, then donate to the trust and get the money you gave to the trust back in the form of a tax credit.

Why would you do that? Because we believe that a healthy, active, adaptive culture, something we all need, requires a healthy, active, adaptive and independent source for culture news, analysis and commentary. We’ve been talking about that this week on the site: The stories we’ve written that have had a big impact, the stories that our new writers have written, the in-depth stories that introduce you to important artists in the community, the reviews from informed writers we post. As other sources for the news, feature stories and interpretation of the arts dry up, we believe that our contribution becomes more and more important.

We hope you think the same way! And if you do, it’s very easy to get started. Thanks for considering us!

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