What Do You Think About Obama’s Plan To Reduce Charitable Giving Tax Deductions?
March 11, 2009 by Erik Folgate
Filed under Economic Policy, Giving, Politics
When President Obama announced his budget plan, one of his tax proposals was glossed over by the media, and I wanted to get your opinion about it.
Starting in 2011, President Obama plans to reduce the charitable giving tax deduction from 100% to 28% of your charitable contribution for families who earn over $250,000 in adjusted gross income. Right now, if you give $100 to your local charity, you can deduct $100 from your adjusted gross income, which determines how much tax you owe on your annual federal taxes. Obama has coined families making more than $250,000 per year as “wealthy”, so he is imposing a reduction in this tax deduction to 28 percent. For families that this applies to, they will only be able to deduct $28 per $100 they give to charity on their taxes.
PROS
- This will help discourage wealthy people from avoiding taxes by setting up bogus charities to give to and receive a large tax deduction.
- It will increase tax revenue for the government
CONS
- It could discourage wealthy people from giving generously to charities and other non-profit organizations.
- It’s really a tax increase without calling it a tax increase.
- Charities and non-profits could see a reduction in revenue, thus causing them to scale down their operations and goals.
I have always been a strong advocate for giving generously to others, whether it’s your money or your time. One of my core beliefs about being financially responsible and accumulating wealth is to set yourself up to be a generous giver. I don’t like the fact that charities and religious organizations could suffer from this and the fact that wealthy people are being penalized for giving. I understand that there many wealthy people that manipulate in order to pay less taxes, but it seems to me that a watchdog agency for charitable contributions would be more beneficial than a reduction of the tax deduction.
What’s your take?
WOW! Actually, I am not surprised. This is the kind of behavior that I expected from Pres. Obama. It really is too bad.
Thanks,
Nate
I don’t like this at all! I agree with you wholeheartedly that giving generously is a wonderful thing, and it is great that those who give are able to receive a tax deduction for their generosity. I think that charities and religious organizations are also going to suffer so much more than they are already suffering!! This new plan will continue to breed a culture of death and selfishness in this country! But I hope those who do give will not be discouraged and will continue to give.
Just how common is it for rich people to set up bogus charities to avoid paying taxes, do you think? I can’t imagine that many rich people do that.
It certainly is something to be concerned about. From what I have read, most people from that income range though won’t let that effect their regular giving. What happens however is that it decreases the desire to give more, above and beyond what they might already give. Also, if that income bracket has their taxes increased overall, there will be less to give to deserving organizations.
@done – i agree that it’s not common, i was just trying to come up with some advantages to him reducing the deduction. I am sure there are some people who believe that wealthy people should be penalize for their charitable giving, because they believe that some of it is bogus giving.