Are charitable contributions really at risk under Obama budget?
It is the buzz of the philanthropy world, news that President Obama's fiscal 2010 budget blueprint cuts tax deductions for charitable donations (and other items) for Americans in the top income brackets.
While some fear a falloff in donations, others are asking about motive. Would wealthy Americans really stop giving to charities if their deductions were reduced?
Under the president's plan, itemized tax deductions for charitable giving and mortgages would be capped for those earning more than $250,000 a year. Changes would be phased in gradually over the next few years. So in 2010, instead of getting a 33% or 35% deduction for charitable donations, Americans in the top income brackets, according to a Wall Street Journal analysis, would get somewhere in the neighborhood of 28%.
In the Obama budget, the cuts on tax deductions for upper-income Americans -- coupled with cuts in government spending -- are projected to help raise $634 billion for a kind of big federal piggy bank that would be used to extend health coverage to the more than 47 million people in America who are uninsured and subsidize premiums for others who can't afford what they have.
Critics are already voicing concern that charities, hard hit by a decline in donations because of sinking stock prices on Wall Street, could suffer further. House Majority Leader Steny Hoyer (D-Md.), the No. 2 Democrat in the House, said the potential loss of philanthropic giving is "clearly one of our concerns." And CNBC's Maria Bartiromo said on MSNBC's "Morning Joe" today that the Obama blueprint comes with "such unintended consequences" and said of charitable donations, "Get ready for those to go off a cliff."
But as Marc Ambinder of the Atlantic put it, "If wealthy people want to give money, then they should give, regardless of tax benefits." Suggesting that the wealthy should not use charities as a tax dodge, he added, "If tax reform down the line were to gut all deductions, would charitable contributions totally dry up?"
-- Johanna Neuman
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