Major shifts in policy can have ripple effects on industries you might not think will feel it. The repercussions can be seen far and wide and the ticketing industry is no exception, especially in face of the new tax laws.
In case you didn’t know, many events and venues rely on donations to help sustain day-to-day activities and employ staff to run much of what happens behind the scenes. The recent tax reform laws are taking a new approach to tax deductions, and charitable donations may be the first to see the hit. The NY Times describes the new legislation, which raises standard tax deductions, saying, “A higher standard deduction means fewer taxpayers will itemize their deductions on their tax returns, reducing the incentive to give to charities.” Many in the non-profit sector were elated going into 2018 since the economy was doing well, and the stock market was continuing to rise. Once word of the new legislation came out however, those emotions were quickly clouded. Many executives were quoted in the Times article saying their charities are projecting large declines and were quickly reaching out to their largest contributors before the end of the year to highlight the potential changes in policy.
Experts at CBS Money Watch pointed out that while,”…millions of relatively small donations from moderate-income people to mainstream charities could be sharply reduced” charitable donations could end up being more appealing to the wealthy. The only problem with this is that they tend to give more to universities and research which leaves out a large chunk of other areas that still rely on these generous donations to stay afloat.
In addition to the increased tax deductions, the Tax Cuts and Jobs Act also has eliminated business entertainment deductions. Before, companies could deduct up to 50% for expenses which included entertainment and charity event tickets. TCJA allows for no deductions for anything considered an entertainment activity, such as concerts, sporting events, art shows, fairs, or anything else in the realm. While some larger companies may still find it beneficial to continue purchasing season tickets to arenas, or suite tickets to concerts most small to mid-sized businesses will find it difficult to justify the spend.
While it’s still early to identify significant impact to communities, it seems only a matter of time. Economist Patrick Rooney, who researches how public policy shapes charitable giving, says, “I anticipate that the tax tweaks will lead Americans and U.S. companies to donate roughly $21 billion less per year to charity.” Research that he has co-led based on earlier tax reforms show that, “these changes would reduce household charitable giving by $13.1 billion per year. That would mark a 4.6% decline from the $282 billion American households gave in 2016.”
Time will only tell exactly what these new tax laws will do, for now all we can do is continue to support the venues and events we love to attend by going out and donating!