« Rick Santorum Gets New Life with Social Conservative Boost | Main | Franklin Graham, Rick Santorum Bring Up Obama's Faith »

February 17, 2012

Nonprofit Groups Oppose Obama's Change in Charitable Deductions

For the fourth year in a row, President Obama is proposing lower tax deductions for the wealthy on donations to churches and other nonprofit organizations. And for the fourth year in a row, nonprofit groups say the change would lead to a dramatic drop in charitable giving.

The reduction, included in Obama's 2013 budget proposal, rankled the Union of Orthodox Jewish Congregations of America.

"We were hoping this would not come up again this year. We asked that they not renew it, but unfortunately the request was not taken," said Nathan Diament, the group's Washington director. "It's a real concern."

Under the Obama proposal, the tax break for charitable donations would fall from 35 percent to 28 percent for the top 2 percent of taxpayers, those earning more than $250,000.

In real terms, that would mean a wealthy taxpayer who donates $10,000 to a charity would be able to only claim a $2,800 deduction on his taxes, rather than the current $3,500.

When it analyzed a similar proposal in Obama's 2012 budget, the Center on Philanthropy at Indiana University said it would boost federal revenue by billions of dollars and have a "modest negative effect" on charitable giving.


Obama has argued in the past that it is not fair that the wealthy receive a larger tax break for the same donations to charity when a middle class taxpayer can only claim a deduction of 15 percent. He has also said charities would "do just fine" under the change.

On Thursday (Feb. 16), the White House said the change wouldn't affect the 80 percent of overall contributions that come from individuals and foundations, and is "unlikely to have a substantial impact on donations."

The last time the charitable deduction rules were changed, in 2002-2003 under President George W. Bush, the top rate was lowered from 38.6 percent to 35 percent.

"At that time, the level of individual charitable giving rose, suggesting that other factors are much more important to the process," Jonathan Greenblatt, director of the White House's Office of Social Innovation, wrote on the White House blog.

But charitable groups insist it remains a bad idea.

"At a time when charities are still struggling, this proposal is a bad idea," said Rick Dunham, president and CEO of Texas-based Dunham+Company, an international consulting firm for charitable organizations.

A survey of 1,000 Americans that Dunham's firm commissioned in January found that nearly eight in 10 Americans were against "cutting, capping or limiting the charitable tax deduction ... because charitable tax deductions encourage people to give their money to help others without getting anything tangible in return."

Galen Carey, the Washington director for the National Association of Evangelicals, called the proposal "very counterproductive."

"We fully support the need to reduce the budget deficit," Carey said, "but it doesn't make any sense why this keeps coming up."

Based on 2009 data, 74 percent of Americans' charitable donations went to churches and religious organizations, said Sylvia Ronsvalle, executive vice president of the Illinois-based Empty Tomb research organization, which tracks charitable giving.

Editor's note: See previous coverage.

Comments

Now, as is often the case at CT, we've buried the lede. "The proposed changes will have a modest negative effect" is our key idea here.

It should also be noted that not all charitable giving is the same, and that for many of the super-wealthy, the bulk of their charitable giving is not to churches and humanitarian causes, but usually for the arts. Its hard to imagine the superwealthy scaling back their giving to save $700 in taxes, but if they do, this will mostly effect the museums and symphony halls, not places like World Vision or your local soup kitchen.

So taxpayer would be able to get less deduction on his taxes...With this proposal non profits will be in trouble.

"nearly eight in 10 Americans were against "cutting, capping or limiting the charitable tax deduction ... because charitable tax deductions encourage people to give their money to help others without getting anything tangible in return."

The tangible thing they get in return is the tax savings from the deduction, otherwise they would not be against capping the deduction. So, should we raise the tax rate, to increase the deduction and the tax savings? It's a complex issue, that shouldn't be looked at by tax rates and deductions alone. I think the key statements are "The proposed changes will have a modest negative effect" and "it is not fair that the wealthy receive a larger tax break for the same donations to charity when a middle class taxpayer can only claim a deduction of 15 percent."

If this is indeed a church, then the Federal Government has no say in what they do. It should be handled by the church hierarchy according to their bylaws. Amendment #1 should protect them from an intrusion from this President.

There is a profound misrepresentation in the manner in which President Obama has couched this issue. Under current law, no one in any tax bracket pays tax on income that is used for charitable contributions; 100% of that income passes straight through to the charity. The only exception is when the size of the contribution is very large (e.g. when a household gives more than half of its income to charity). President Obama is proposing a new tax of between 7% and 11.6% (or possibly more, depending on which combination of his tax proposals are adopted) on charitable contributions that would apply only to those in the top two tax brackets.

No one comes out ahead (financially, at least) by making a charitable contribution. The wealthy didn't become wealthy by giving away $10,000 in order to save $3500 on their taxes. Instead, they elected to give $10,000 to charity rather than keep $6500 for themselves. A lower-income taxpaper with $10,000 to spare has a choice between giving the $10,000 to charity or keeping $8500 for themselves. To say that this system disproportionately benefits the wealthy is silly.

100% of what is donated to a charitable foundation should be deductible...period!

Articles about taxes in America should not just focus on a narrow effect of taxes but on the broad picture. Yes, when those cuts are put in place there will inevitably be an effect. Direct your issues to the folks who make tax laws, the US Congress, many of whose members have signed an allegiance to a private group that will not raise any taxes, in spite of their alleged primary allegiance to the American people who they serve. When the tax rates were different, that is the highest rate was 39%, the budget was balanced. Since the Bush tax cuts, that has not been possible. It is the Congress that determines this, the same Congress that says that there must be cuts is spending. So wis the writer of the article ignorant of the way government works? Or is this just another opportunity to bash a democratic president?

Non-profits exist in the same America whose lawmakers refuse to appropriate money to repair or rebuild the crumbling infrastructure of roads, bridges and other deterioriating fixtures in our country. This is the congress that was unwilling to agree to ten times the amount of budget cuts versus one times the tax increases in order to balance our budget. The Congress took a pledge to an organization to never vote to raise taxes or lose generous contributions to political campaigns. These facts are public knowledge, so why does the writer give the impression that the proposals being made by the President are simply his preferences, rather than an option in the face of congressional restrictions?

Taxes need to be raised, but Republicans have signed a pledged to not raise taxes. Even a relatively small tax increase on the wealthy would be a significant help. People need to be a strong voice for ending tax advantages for wealthy special interest, such as oil companies.

Our infrastructure (bridges, roads, etc.) are crumbling. We have a record number of people living in poverty while the income gap between the top 5% that has been increasing for decades continues to widen. We are moving towards becoming a third world country.

Linda, you really don't need to worry about the unemployed, obama doesn't. As for our infrastructure, he is having Chinese companies build our bridges and roads, etc. http://abcnews.go.com/US/bringing_america_back/american-infrastructure-jobs-shipped-china/story?id=14592567

And he's having Brazil build jets for us. The US used to build jets for around the world, but not to worry, obama is changing that and reversing it.
http://hotair.com/archives/2011/11/22/air-force-bounces-us-manufacturer-for-brazilian-competitor/

The number of unemployed doesn't count those who have been off from work for more than 99 weeks (and that is several hundred thousand people), or the 80% of college graduates living at home after graduation. The unemployment rate is really closer to 26%.

Obama is dismantling 85% of our nuclear missiles unilaterally, taking our Navy down to 1917 levels, the Air Force to the lowest levels ever, and drastically reducing our all volunteer force. In the meantime, Putin just promised to build up Russia's arms faster than the Cold War rate, the Chinese army has about 300 million men, and North Korea has a huge army.

Those being pushed out of the military can join the huge number of illegal aliens and unemployed civilians looking for the few jobs that are left tossing burgers.
The number of unemployed doesn't count those who have been off from work for more than 99 weeks (and that is several hundred thousand people), or the 80% of college graduates living at home after graduation. The unemployment rate is really closer to 26%. Yes, this is change alright, for the worse in hundreds of ways.

The budget proposal to reduce or eliminate tax deductions for charitable given reflects Pres. Obama's belief that the government is better able to provide the types of services that private and religious charities provide, including funding for the arts as well as social and missional services. This is despite an at least 100 year track record to the contrary.

Taxes don't need to be raised - government spending needs to be cut (although cuts in non-entitlement and defense spending are only a fraction of the problem - there needs to be massive entitlement reform, as well.)

As far as infrastructure spending - the federal government could do a lot more on basic infrastructure maintenance if they focused only on federally maintained roads, bridges, locks/dams, etc., instead of paying for things like streetlights, trees and flowers, sidewalks on state and local streets.