President Obama’s (Yet Again) Proposed Cap on the Tax Benefit of the Charitable Contributions Deduction

As in previousyears, the proposed budget issued by the Obama administration would limit the fullvalue of itemized deductions, including the charitable contributions deduction,to the 28% income tax bracket.  Forcoverage, see articles in Forbes, The Chronicle of Higher Education, TheNonProfit Times, and Accounting Today.  Apress release by The Alliance for Charitable Reform (ACR) features thefollowing poignant criticism of the proposal as applied to charitablecontributions:

“Each year – and sometimes more than once – the Presidenthas proposed cutting the charitable deduction, despite resounding oppositionfrom the American public and Congress,” said Sandra Swirski, executive directorof ACR.  “This year, the cut is even deeper.  With the January 1sttax hike, the gap between tax rates and the charitable deduction rate is widerthan ever and that will translate into less giving.  Not only is thisharmful to giving, which will cost charities across the country billions ofdollars, but it is a dangerous precedent for the federal government to set.”

On a more promising note for nonprofits, and in a story that places a more positive spin on the proposal as a whole, the Chronicle of Philanthropy observes that the proposedbudget would also increase spending for nonprofit programs in education andhealth care.

JRB