Charities stand to suffer countless losses in donations if the Obama administration’s fiscal plan to raise hundreds of billions of dollars by limiting tax deductions and squeezing more money out of the wealthy is enacted, economists tell the
Washington Times.
And it appears that schools and health groups would be most affected.
“All charities will lose revenue, but I expect that educational and health organizations will be hit the hardest,’’ Huseyin Yildirim, an associate professor of economics at Duke University, told the newspaper.
He added that religious and social-service organizations “will be affected the least, as their donor base is skewed toward lower-income households who are less likely to enjoy tax credits to begin with.’’
One argument the White House earlier this year is that 80 percent of overall charitable contributions would not be affected “at all’’ because the money comes from families who make less than $250,000 — the proposed cutoff sum for higher taxes.
But that argument doesn’t fly with many charities, including the Philanthropy Roundtable.
Sue Santa, the Roundtable’s senior vice president, has argued that Obama is “sending mixed messages to the charitable community. On one hand, he wants to limit the charitable deduction. On the other, he wants millionaires to continue to give to charity while also paying higher taxes.”
The Christian Science Monitor reports that while “most deductible expenses that would be subject to a cap or limit are non-discretionary … charitable giving is entirely discretionary. Thus, a taxpayer trying to squeeze all of her deductions into a fixed dollar cap is more likely to reduce her charitable giving — though by how much is a matter of debate.’’
The newspaper suggests “the solution may be a way to better target the charitable deduction. [The Tax Policy Center, a financial think-tank] and others have shown that’s possible in a carefully designed tax reform.
“It’s an object lesson, however, in the dangers of a quick-and-dirty deduction cap aimed only to meet a revenue target.’’
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