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  • Obama's Jobs Bill Is Bad News for Charities

    President Barack Obama proposes to pay for his $447 billion jobs bill mainly by limiting tax deductions for wealthy Americans. Unfortunately, if enacted, this policy will likely dampen charitable giving and further shift perceived responsibility for social welfare from individual donors to the state.

    The President’s plan calls for lowering the rate at which wealthy taxpayers can take itemized deductions—from the current rate of 35 percent down to 28 percent, beginning in 2013. The change would affect individuals making more than $200,000 (and families making more than $250,000) per year.

    This isn’t the first time President Obama has suggested this approach. He did so in his proposed 2011 and 2012 federal budgets and in 2009 attempted it as a way to pay for his health care plan.

    The result of President Obama’s proposal will likely be several billion dollars in decreased revenue each year for hospitals, educational institutions, and nonprofits that help the poor. While giving would probably drop only a small percentage, the anticipated amount would total more than the combined annual operating budgets of the Ameri­can Cancer Society, World Vision, St. Jude Chil­dren’s Research Hospital, Habitat for Humanity, and the American Heart Association.

    Those who are served by these institutions aren’t the only ones who would be hurt by decreased giving. Many people’s jobs would also be threatened.

    “If charities have less resources, they’ll be forced to choose between laying off employees or cutting needed services,” argues William C. Daroff of the Jewish Federations of North America. “Nonprofits employ almost 10 percent of the work force nationwide, and in many states nonprofits are the largest employers. In our view, cutting the deduction is like cutting your nose to spite your face.”

    While it’s true that most donors don’t make gifts based solely on the charitable deduction, experts suggest that the deduction sometimes alters the manner and timing of giving as well as the number and size of gifts. This is especially true concerning large gifts from high-income Americans, the very taxpayers Obama’s plan targets. These high earners make up only a small percentage of total American households, but they contribute almost half of the donations claimed each year as charitable deductions.

    Perhaps most importantly, Obama’s proposal sends the message that federal bureaucracy can deploy the resources of the wealthy more effectively than civil society can. Decreasing an incentive for charitable giving implies that the state should assume responsibility for people’s needs, even at the expense of vital nonprofit organizations. Churches, ministries, and other community-based institutions, however, are often better equipped to serve people in need. And they often do so at reduced costs.

    At a time when charities most need resources to care for the hurting and hire more employees, President Obama should seek ways to encourage voluntary giving and protect nonprofit groups. Instead, his proposed jobs bill moves the dial of social responsibility one more notch in the direction of the state.

    Posted in Culture [slideshow_deploy]

    5 Responses to Obama's Jobs Bill Is Bad News for Charities

    1. This is a horrible article. the average wealthy person only gives because they receive a tax break. Which translates into the charitable contributions having a negative reciprocal effect because the less the rich are taxed the more charities are needed to offset the the tax loss due to the rich not paying taxes on the "donated income". Its a revolving door.

      • @joepdx says:

        What's more, if as you say "the average wealthy person only gives because they receive a tax-break" then charities are already in dire straits. Charity is not some strawman of let's-go-broke radical selflessness, but it is also does not, cannot depend on "what's in it for me" conditionalism. If wealthy people aren't going to give to charities when there aren't tax-breaks, that's the moral failing of the wealthy.

      • Bobbie says:

        gee Mr. Greezil, we can't afford to give as much as the tax code allows deductions. But we still give when we can. If taxes increase to take over ALL special interests government deems as "charitable," regardless of freedom and personal intellect of choice, we won't be able to give to our choice of charities anymore as currently we aren't free to do, without government contention.

    2. Kevin B. Gilnack says:

      "Unfortunately, if enacted, this policy will likely dampen charitable giving and further shift perceived responsibility for social welfare from individual donors to the state."

      This is an absurd premise. The last three years of local, state, and federal budget cuts have forced nonprofits and their donors to take on a far greater share of the burden for providing essential social services, that have been — and should be — a responsibility shouldered by the whole community through state contracts with nonprofits paid through tax revenue.

      The nonprofit sector has continued to innovate and find new sources of operating dollars to continue to advance their missions, as governments and individuals have backed away from their commitment to creating health communities and a healthy economy by providing a strong social safety net.

      The author raises a legitimate concern about how a reduction in tax incentives will impact giving, but people are already planning to give less due to the economy http://www.philanthropyjournal.org/news/top-stori….

      Regardless, the idea that social welfare programs should be funded by private donors and by the whole community is a ridiculous and dangerous proposition that Heritage would do well to stop proponing.

    3. TX_Patriot says:

      Imagine that…!!! A jobs bill that could potentially take away some jobs push a sector into government hands at a higher cost. People seem to forget that Mr. Hussein ran on hope and change platform to better the economy over his predecessor. I have yet to see any sign of "improvement" that would give ANYONE hope. The change we definately got in massive doses. Economy is eight times worse off than before he took office, unemployment is more than triple what it was, foreign policy is crumbling and all the spending in between has shown no signs of effectiveness in bettering anything.

      After nearly three years, we are solidly going backwards. Dollar has already been downgraded enough. Stop printing money, stop spending money and fess up to the fact that Mr. B. Hussein Obama does not have the experience to move this country in a positive direction.

      Two things to remember along the way:

      - A government that can give you everything you want can also take away everything you have and…
      -Government is not answer to the problems, government is the problem!

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