Tax Lawyer's Blog

The Orlando Sentinel opposes President Obama’s plan to pay for health care reform partly by reducing the value to Americans of gifts made to charitable organizations:

Mr. Obama’s budget calls for reducing the value of itemized tax deductions for families earning at least $250,000 starting in 2011, the same year he would allow the Bush tax breaks for those Americans to expire. That would reduce deductions for mortgage interest and state taxes, but also for charitable contributions.

Add this to the profligate spending Obama has managed in just six weeks in office and you can see why some people fear a lunge toward socialism.

It doesn’t take a Sputnik scientist to recognize that if you make it more expensive to give to private charity there will be less money given to private charity.

Here’s the Sentinel:

[H]igh-income Americans, though a small fraction of taxpayers, account for a disproportionate share of charitable contributions. In 2006, the 2.9 percent of tax returns that reported an adjusted gross income of $200,000 or more accounted for 43.5 percent of itemized charitable-gift deductions, according to the Center on Philanthropy. 

Scholars seem to be divided over the importance of tax benefits to givers. While there will always be Americans eager to give to nonprofits no matter what the paybacks might be, a Bank of America survey last year found that almost half the respondents would cut their charitable contributions if they didn’t get a break from Uncle Sam.  

What this amounts to is a shift from private, voluntary giving to forced, public spending.

A shift, in other words, that lessens peoples’ freedom by restricting their spending options.

I saw Tom Donahue, President of the United States Chamber of Commerce, say today on This Week With George Stephanopoulos that the portions of Obama’s budget that would reduce the tax benefits of charitable deductions were “dead on arrival.”

Let’s hope he’s right.

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