America’s year-old threat became a reality at the end of December, when the Reagan Administration pulled out of UNESCO. The action put an end to official U.S. participation in the global cultural programs of the 161-nation umbrella organization, potentially diverting nearly $50 million in car funds from scientific, educational and artistic purposes.
In a prepared text read at the State Department on Dec. 19, assistant secretary of state Gregory J. Newell put forth the Administration’s conclusion that U.S. interests are still not being served by UNESCO:
“The circumstances that impelled us last year to announce our plan to withdraw have not changed sufficiently this year to warrant a change in our decision: Extraneous politicization continues, as does, regrettably, an endemic hostility toward the institutions of a free society—particularly those that protect a free press, free markets and, above all, individual human rights.”
The Paris-based organization was formed in 1946 to foster literacy, education, scientific and cultural exchange, and preservation of cultural artifacts. Among its affiliated bodies is the International Theatre Institute. The U.S. was by far the largest financial backer of the agency, its dues covering some 25 percent of UNESCO’s nearly $200 million annual budget.
Americans were divided over the withdrawal. The strong move by the Administration was hailed by conservative groups, but some United Nations officials, American legislators and members of the cultural, scientific and educational communities contended that withdrawal was not the way to solve UNESCO’s problems and feared that withdrawal will send signals to the rest of the world that the U.S. is not interested in international cooperation or in protecting the ideals of democracy. American artists, scientists and scholars charged that the Administration did not look hard enough at the potentially adverse effects of the withdrawal, including diminished access to scholarly research and information, as well as the loss of American influence over UNESCO cultural policies.
U.N. secretary general Javier Perez de Cuellar told the press, “My position is very clear. If it is considered that something is wrong with our organizations, please stay inside and fight from inside,” but Burton Pines, vice president of the conservative Washington-based Heritage Foundation, argued that it would “force UNESCO to shake itself up and get back on track.”
Representative Jim Leach (R-lowa), the leading congressional opponent of the U.S. withdrawal, called it “a selective cut-and-run assault on the United Nations system,” blaming new-right pressures on U.S. foreign policy. “Given the fact that we have prevailed on every major issue facing UNESCO in recent years, it is difficult to know how U.S. views will be better protected from an empty chair.”
Leaving open the possibility of rapprochement in the future, the State Department announced the establishment of an “observer mission” in Paris to look after U.S. interests at UNESCO. “When UNESCO returns to its original purposes and principles,” the official statement concluded, “the United States would be in a position to return…”
The written text read by Newell promised to “continue support for international activities in the fields of education, science, culture and communication through other existing
channels: multilateral, regional, bilateral and private-sector institutions.” ITI and other nongovernmental organizations engaged in work previously carried out under UNESCO were assured by department officials last spring that they would be considered for direct government funding if the U.S. withdrew its UNESCO membership.
However, following the official announcement, cultural leaders were concerned that the roughly $47 million may have instead fallen victim to Administration budget-cutting and would not be redeployed to serve cultural purposes. Newell announced no specific plans for the funds freed up by the U.S. pull-out, and just days after the official withdrawal was announced, a high-level State Department official reportedly circulated a memorandum to agency personnel stating that the funds “no longer exist.”
At the same time, UNESCO will be hard pressed to cope with the heavy loss of U.S. funds, and further defections loom—both Great Britain and Singapore have announced their intention to follow the U.S. lead and exit from UNESCO at the end of 1985. West Germany, the Netherlands, Belgium and Denmark have also indicated they might reconsider their memberships, and it appears that UNESCO’s secretary general Amadou Mahtar M’Bow of Senegal faces a crisis that could effectively cripple the international agency in the future.
No Incentive to Give
Trial balloon or no, the Administration’s proposed tax reform plan will provide the basis for debate over the coming months and is certain to influence the future of America’s income tax system. While the impact on individual taxpayers is still unclear, some of the proposals have raised outcries from leaders of nonprofit organizations, which are particularly hard hit by some of the proposed changes.
According to the American Arts Alliance, the plan unveiled in December by Treasury secretary Donald Regan contains five proposals affecting the nonprofit arts. One of the most controversial is a limitation on the charitable contributions deduction to amounts in excess of two percent of a taxpayer’s adjusted gross income. The charitable contribution was the first, and for years the only, income tax deduction allowed and was originally designed to stimulate private giving for public purposes. The new proposal would effectively remove the deduction from the majority of taxpayers, most of whom make annual contributions below the two percent limit.
The plan also eliminates the charitable contributions deduction for non-itemizing taxpayers as of Jan. 1, 1986, the year in which the CCL provision was scheduled to be phased in fully to allow 100 percent above-the-line deductions for all taxpayers. Charities, including the nonprofit arts, fought hard to gain this provision, which went into effect in 1981.
The Administration package also limits deductions for gifts of appreciated property to actual costs plus a factor for inflation or to actual market value, whichever is less. While the Regan proposal does include some provisions to enhance giving, including repeal of the contributions limits of 50 percent of individual adjusted gross income and 10 percent of corporate adjusted gross income, Arts Alliance executive director Anne Murphy predicted that if enacted “its overall effect on the nonprofit community will be severe and damaging.” In a statement to the press, she added: “For the past four years, the Administration has celebrated the contribution of the private sector to the growth of America. For this same Administration now to recommend the elimination of tax deductions for charitable giving is a blatant contradiction of its policies and would threaten the private/public partnership that is unique to the American tradition.”
“Since gifts from individuals constitute the largest single source of contributed income for theatre companies, any erosion of this vital base of support would seriously jeopardize the future of the American theatre,” said Robert Holley, author of Theatre Facts 84, a special report to be published in next month’s American Theatre.
The Independent Sector, an umbrella advocacy agency representing the full range of American nonprofit institutions, agreed, claiming that the effect would be a reduction in total charitable giving by individuals of some 25 percent, or $13 billion annually. Those provisions of the Regan plan designed to stimulate giving, by contrast, were estimated by IS to make up only four percent of the losses to charities nationwide.
The Regan plan is very unlikely to be adopted as is, and certainly not without a thorough airing of the issues. Several other tax plans have been proposed previously by congressional leaders, including the “Fair and Simple Tax Act” introduced by Representative Jack Kemp (R-NY) and Senator Robert Kasten (R-WI), and the “Fair Tax Act” sponsored by Senator Bill Bradley (D-NJ) and Representative Richard Gephardt (D-MO). Both plans will undoubtedly resurface as the debate heats up. One thing most legislators do agree on is the need for some sort of tax reform, but the federal deficit has loomed as an even larger priority for many.
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