Wednesday, January 2, 2013
With Congress having passed legislation to avert the fiscal cliff, Doug Donovan writes in today's Chronicle of Philanthropy that the deal could hurt charitable giving. According to Donovan, the legislation Congress passed yesterday "limits how much wealthy people can claim in deductions for charitable contributions and other spending when they itemize their tax returns." He also reveals that "throughout December nonprofits have been lobbying Congress and President Obama not to impose limits on tax savings really wealthy donors get when they make charitable contributions."
The Senate-crafted plan enacts limits that charities have opposed. It reinstates a provision eliminated in 2010 that reduces itemized deductions by 3 percent of the amount that household income exceeds $300,000. Write-offs grow more limited the more taxable income a person has and could reduce the value of deductions by up to 80 percent for the highest-income taxpayers, according to the Tax Policy Center.
The 2010 limits have long been opposed by charities. Independent Sector noted that the limit could reduce giving in its February analysis of the idea, which was included in President Obama’s 2013 budget proposal.
The organization, which represents about 600 nonprofits, also signed a letter this summer from the Charitable Giving Coalition to Sen. Harry Reid, the Senate majority leader, stating its opposition to the deduction limits.
The letter, signed by nearly 30 of the nation’s largest nonprofit organizations, said the limits would “result in fewer contributions flowing to America’s charities, which are now being asked to provide even more services to the most vulnerable among us.”
I am unsympatheitc to the cries of the Charitable Giving Coalition. I cannot understand why the organization's members believe that the only reason people give to nonprofits is to get a tax deduction! Also, whoever said that wealthy individuals give more per capita than their poorer fellow citizens?