Tax-credit impact – Shift in funds, oversight

President Bush’s plan to let states use welfare funds to pay for a tax credit to boost donations to poverty-fighting programs will hurt poor people, a new study says.

The study, released May 9 by The Pew Forum on Religion & Public Life, looks at tax credits in Arizona, Michigan and North Carolina, and finds “no evidence that tax credits would increase giving.”

In fact, it says, charitable-giving data suggest that “programs in communities with the greatest need would receive the least in contributions.”

What’s more, the study says, using welfare funds to offset the tax credit’s cost to states could shift those funds from poor communities to those with less of a need for services.

The study, written by Margy Waller, former senior adviser for welfare and working families at the White House Domestic Policy Council, also chides Bush for championing a plan that it says would replace government oversight with decision-making by private donors.

“It is surprising that the Bush administration would suggest a funding mechanism that eliminates accountability in government funding since President Bush has stated his commitment to performance-based grant-making,” the study says.

Saying Bush’s proposal “is not in the best interest of low-income children and families,” the study calls on lawmakers and others not to accept the plan on faith but instead to urge study of existing state charity tax  credits.

Lawmakers, the study says, also should scrutinize any plan that “substitutes an unregulated, unmonitored system of publicly financed support for one that comes with rational spending formulas and the oversight of government officials.”

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