Saturday, April 27, 2013
As I have previously discussed, President Obama’s budget proposal could have a huge impact on charitable donations.
For every donation to a nonprofit organization, taxpayers in the highest tax bracket currently receive a 39.6 percent tax deduction. Obama proposes to cap the tax deduction for donations at 28 percent for all tax brackets. Along with increased income taxes, capital gains taxes, and Medicare surcharges, this cap on tax deductions could provide an additional disincentive to donate. Charities also worry about another budget proposal known as the Buffett Rule that would require those with an annual income over $1 million to pay a minimum tax of 30 percent.
This proposal comes during a period of stagnant revenue for the charitable sector. One study shows “that the top 2.2 percent of taxpayers were responsible for 27 percent of all charitable giving.” Providing disincentives for the top tax brackets to donate may have a devastating effect on the charitable sector and the needy who benefit from it.
See Colleen O’Dea, Charities Fear Obama Budget Will Hurt Donations, Private Wealth, Apr. 19, 2013