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

As in previous years, the proposed budget issued by the Obama administration would limit the full value of itemized deductions, including the charitable contributions deduction, to the 28% income tax bracket.  For coverage, see articles in Forbes, The Chronicle of Higher Education, The NonProfit Times, and Accounting Today.  A press release by The Alliance for Charitable Reform (ACR) features the following poignant criticism of the proposal as applied to charitable contributions:

“Each year – and sometimes more than once – the President has proposed cutting the charitable deduction, despite resounding opposition from the American public and Congress,” said Sandra Swirski, executive director of ACR.  “This year, the cut is even deeper.  With the January 1st tax hike, the gap between tax rates and the charitable deduction rate is wider than ever and that will translate into less giving.  Not only is this harmful to giving, which will cost charities across the country billions of dollars, 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 proposed budget would also increase spending for nonprofit programs in education and health care.

JRB