View Research by Author - Joseph J. Cordes

Citation URL: http://www.urban.org/JosephJCordes

In this age of high-profile corporate foundations and socially responsible companies, the barrier between the nonprofit and business worlds is more permeable than ever. Nonprofits and Business assembles diverse researchers to examine nonprofits from commercial, economic, operational, and legal perspectives. As the government and the public have demanded greater efficiency from nonprofits, nonprofits have looked to corporations to find creative ways to raise money and demonstrate effectiveness. Nonprofits and Business is a unique resource on this emerging trend.

From adjusted gross income to zoning and property taxes, the second edition of The Encyclopedia of Taxation and Tax Policy offers the best and most complete guide to taxes and tax-related issues. More than 150 tax practitioners and administrators, policymakers, and academics have contributed. The result is a unique and authoritative reference that examines virtually all tax instruments used by governments (individual income, corporate income, sales and value-added, property, estate and gift, franchise, poll, and many variants of these taxes), as well as characteristics of a good tax system, budgetary issues, and many current federal, state, local, and international tax policy issues. The new edition has been completely revised, with 40 new topics and 200 articles reflecting six years of legislative changes. Each essay provides the generalist with a quick and reliable introduction to many topics but also gives tax specialists the benefit of other experts’ best thinking, in a manner that makes the complex understandable. Reference lists point the reader to additional sources of information for each topic. The first edition of The Encyclopedia of Taxation and Tax Policy was selected as an Outstanding Academic Book of the Year (1999) by Choice magazine.

The Washington Regional Association of Grantmakers (WRAG) asked the Urban Institute's Center on Nonprofits and Philanthropy (CNP) to update its estimates of individual charitable giving in the Metropolitan Washington Region. The resulting estimates of charitable giving are presented in this report.

Each year, millions of American taxpayers claim tax deductions for contributions to their favorite charities. The charitable tax deduction subsidizes private giving by reducing the out-of-pocket cost of making contributions. In April 1999, the Urban Institute’s Center on Nonprofits and Philanthropy and Harvard University’s Hauser Center for Nonprofit Organizations convened the first Seminar on Emerging Issues in Philanthropy to explore whether the benefits derived from the charitable tax deduction are worth the cost.

Nonprofit organizations engage in a range of income-producing activities: Universities charge tuition, hospitals collect fees, and social-service organizations enter into government contracts. To the extent that an activity is "substantially related" to the organization's tax-exempt purpose, the income is tax-free (and the associated expenses are, essentially, not deductible). By contrast, net income from "unrelated business activities", is subject to the Unrelated Business Income Tax (UBIT), which generally taxes such income at ordinary corporate (or trust) tax rates. Congress, however, has exempted dividends, interest, rents, and royalties from the UBIT.

As immense individual wealth for some is generated by an extended bull market in this global high-tech economy and the unprecedented transfer of wealth from the so-called "baby boomers" begins, more attention is being focused on giving to charity. Over the next half century, the transfer of wealth in the United States is expected to range between $41 trillion and $136 trillion, with some researchers predicting that charities will realize an additional $6 trillion to $25 trillion in donations. Yet in spite of renewed interest in understanding philanthropic gifts, the primary sources of information on individual giving are very limited and give only an aggregate view at the national level. These data show that most households give about 2 percent of income, a proportion that has remained relatively constant for years despite economic ups and downs, changing government policies, and changing attitudes about charities and philanthropy.

On April 15, 2000, more than 30 million taxpayers who itemized deductions on their tax returns were able to claim tax deductions for any contributions made to their favorite charities. The effect of the deduction was to lower the taxpayer’s cost of giving one dollar by amounts ranging from 15 cents to almost 40 cents. But many taxpayers who contribute to charities were not eligible for a charitable deduction because they claimed the standard deduction instead of itemizing deductions on their tax returns.

Just a few years after the first baby boomers change from taxpayers into retirees, Social Security will begin paying out more in benefits than it collects in revenues. For the next three decades, working Americans are expected to come up with the income taxes necessary to pay interest and principal on bonds held by the Social Security trust fund, thus technically enabling it to run deficits for a while. By about 2040, however, those deficits will have led to the exhaustion of the trust fund, most baby boomers will have retired, and Social Security taxes will be sufficient to cover only about two-thirds of the benefits promised under current formulas.

The double taxation of dividends comes about in the U.S. tax system because corporate profits are taxed once by the corporate income tax and then again when these profits are distributed to shareholders. This article describes the consequences of double taxation in terms of how corporations pay out their profits and finance their expenses.

Expensing is a system allowing a taxpayer to deduct the costs of acquiring a depreciable capital asset immediately as these costs are incurred, instead of taking a stream of depreciation deductions over the useful life of the asset. This article uses an example to illustrate the financial effects of allowing investment costs to be expensed.

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