President Obama has once again pushed to limit charitable deduction in the budget he sent to Congress this past Monday. This budget is the seventh budget President Obama has sent to Congress that calls for a limit on tax breaks on certain activities.
Currently, a deduction’s value is tied to a person’s tax bracket, so individuals in the 39.6 percent tax bracket can get a tax savings of 39.6 cents for every dollar donated to charity. President Obama’s plan would limit the value of charitable gifts to 28 percent for individuals who earn more than $200,000 and couples who earn more than $250,000. Such a proposed change would cause for the loss of billions of dollars in charitable contributions each year.
The White House states that lowering the charitable deduction for higher-income taxpayers “would make the tax code more equitable.” However, many individuals from the nonprofit community are questioning these budgetary changes. Joanne Florino, the senior vice president for public policy at the Philanthropy Roundtable stated that the proposed changes “leave us wondering why the president would hold charitable donations harmless in some areas of the tax code but not in others.” Vikki Spruill, the president of the Council of Foundations, said the following about the proposal: “This misguided proposal would cost our most vulnerable communities the most… This approach directly impacts the ability of donors to support vital services and removes a crucial incentive to give.”
The House plans to begin debate on the measures this week, according to the Council of Foundations.