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  • Obama Tax Proposals: Danger Ahead for Charities and Civil Society

    Here’s a test: Guess who made most of the charitable contributions in 2006, according to the most recent data available from the Internal Revenue Service? If you guessed “taxpayers with high incomes”, you’d win the prize. Now, guess which class of taxpayers the Obama administration wants to discourage from making charitable contributions. If you guessed “taxpayers with high incomes”, you just won again.

    The new Obama budget for Fiscal Year 2010 proposes that Congress reduce the tax deduction for charitable contributions by high income taxpayers. That worries many charities who depend on contributions from the well heeled and affluent among us. If the tax incentive to make a deduction is taken away, that might lead some to reduce their giving to charities.

    It also should worry those concerned about the future of the civil society, or that collection of institutions, organizations, and non-governmental processes that handle most of life’s challenges in our neighborhoods and social networks. Fewer dollars from upper income neighbors mean less activity by organizations those dollars support.

    So, how big a problem could this be? According to the IRS, the 3,656,493 tax returns containing incomes above $200,000 contributed $81,261,387,000 to charities. That’s an average contribution of $22,224. Now 3.6 million returns is only 9 percent of all returns in 2006, but $81.3 billion in contributions is 44 percent of all giving as recorded through the tax forms. The number probably is a good deal higher than that, since many taxpayers do not report all or any charitable contributions on their itemized deductions schedule.

    So, it’s a big problem. By the way, the rest of us (37,781,256 tax returns) probably won’t fill the gap. Taxpayers with incomes below $200,000 and who itemized their deductions contributed $105.4 billion to charities, for an average contribution of $2,789, or nearly ten times less than those taxpayers above $200,000.

    Of course, millions of taxpayers of more modest means do not itemize and still give to charities and churches. We know from research on charitable giving that an average of about 2 percent of income is given in good years and in bad. Indeed, this percentage has weathered recessions and stock market bubbles with amazing equanimity.

    So, why worry? Well, that’s a percentage of income, not a dollar amount. When recessions hit, incomes fall; and so does the total amount going to charities. Suppose that everyone’s income falls by 50 percent, yet they still give 2 percent to charities. That’s a lot fewer dollars going to help homeless people with shelter and food, to provide domestic violence victims with counseling and protections, and to supply little leagues teams with uniforms and practice time.

    What we really need in bad times is for high income individuals to step up to the plate. Yet, President Obama essentially is saying, don’t worry: we can still win with our biggest bats sitting on the bench. Given the central role that these dollars for charity play in the very real game of life, that’s an awesome and dangerous gamble for the president to make.

    Posted in Ongoing Priorities [slideshow_deploy]

    10 Responses to Obama Tax Proposals: Danger Ahead for Charities and Civil Society

    1. Barb -mn says:

      Don't let him take the charities. This will subliminally rid the country of CHRISTIANITY. Notice how states and the president are weakening civil law. A law that came from the middle east, derived from the man, Jesus Christ.

    2. Spiritof76, New Hamp says:

      It is intentional. Charities will beg the government for the money and the government can pick and choose who should get funded. Majority of conservatively leaning charities will go out of business. Isn't that what Obama wants? Total control?

    3. Pingback: The wealthy contribute a higher percentage of income to charity at osmoothie

    4. Pingback: Jason’s Blog » Obama Tax Proposals: Danger Ahead for Charities and Civil Society

    5. usr102, Florida says:

      Why should Obama care? His tax returns which he disclosed show that he doesn't make charitable contributions anyway. He will just tax those who work hard to pay for those who don't want to work.

    6. Steve says:

      Yes, Obama and his ilk don't like the idea that the INDIVIDUAL can decide where money can best be spent in charities. They want to make the decision who gets help with YOUR hard earned Money. And yes, they'll drive any conservative charities right out of business. And the least deserving will be the best rewarded.

    7. Danielle, Washington says:

      I don't usually agree with Obama or his team on much, but you shouldn't give money to a charity for the purpose of a tax write-off, but because it is the right thing to do. I wouldn't let anyone write-off anything. I've never claimed my charitable giving on my taxes, nor will I, it is supposed to be anonymous.

      A mostly political blog that isn't Republican or Democrat.

    8. Pingback: Obama’s FORCED VOLUNTEERING: Approved! « FactReal

    9. EJ,Tulsa says:

      lets don't forget congress who by the way had a 9% approval rating not long ago will have to pass these changes….. not likely…..

    10. Pingback: The Angry White Guy » Blog Archive » Obama’s magical math.

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