Wednesday, March 11, 2009
As readers know, President Obama's proposal to reduce the tax value of the charitable contribution has sparked debate within the nonprofit sector and indeed a bit of glee amongst conservative writers who note the irony that "liberals who run" the nonprofit sector are suddenly crying over proposals to raise taxes. According to an online op-ed piece in yesterday's Wall Street Journal:
Among those shocked by President Obama's 2010 budget, the most surprising are the true-blue liberals who run most of America's nonprofits, universities and charities. How dare he limit tax deductions for charitable giving! They're afraid they'll get fewer donations, but they should be more concerned that Mr. Obama's policies will shove them aside in favor of the New Charity State.
What did these nonprofit liberals expect, anyway? Mr. Obama is proposing a vast expansion of the entitlement state, and he has to find some way to pay for it. So logically enough, one of his ideas for funding public welfare is to reduce the tax benefit for private charity. His budget proposes to raise the top personal income tax rate to 39.6% in 2011 from 35%, and the 33% rate to 36% while reducing the tax benefit from itemized deductions for the top two brackets to 28% from 35% and 33%, respectively. The White House estimates the deduction reduction will yield $318 billion in revenue over 10 years.
As op-ed schtick, the piece is at least entertaining (relying on an implicit accusation of a "vast liberal conspiracy"). This second rhetorical gem, for example: "Politics hath no fury like a rich liberal scorned." I can appreciate biting commentary even if I don't necessarily agree. Anyway, Professor Ann Murphy was kind enough to share a fine presentation put together by H. King McGlaughon (political affiliation unknown) that sheds empirical light on the reasons why the ultra wealthy make charitable donations. She notes that slide number 19 is particularly interesting. Download the presentation here: Download WachoviaCharitableGivingPresentation.ppt .