Tuesday, March 31, 2009

A Truly Bad Idea

As many of you know the Obama administration is proposing a reduction in the amount of charitable giving that Americans earning $250,000 can deduct from their taxes. We are left to wonder what is the justification for such a truly bad idea. It will certainly reduce the amount given to charities and non-profits such as churches. The government will then be looked upon to make up the decline in charitable giving making Americans even more dependent upon Washington.

As a March 25th article in the Washington Post reports:
President Obama's proposal to limit the tax deductibility of charitable contributions would effectively transfer more than $7 billion a year from the nation's charitable institutions to the federal government. But the high-income taxpayers affected by the rule change are likely to cut their charitable giving by as much as the increase in their tax bills, which would, ironically, leave their remaining income and personal consumption unchanged.

In effect, the change would be a tax on the charities, reducing their receipts by a dollar for every dollar of extra revenue the government collects. It is hard to imagine a rationale for taxing schools, hospitals, medical research budgets and arts organizations in this way. I suspect that the administration officials who drafted this proposal did not understand that it would have this perverse effect.

Read the entire article HERE.

3 comments:

The Prophet said...
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Mainline Mom said...

Really this makes me sad. We don't give in order to get the deductions, but the deductions do encourage and solidify some gifts. One thing I might be tempted to do would be to trash my clothes/toys/household goods rather than box them up and take them to Goodwill and wait for a receipt, which really I DO do for the deduction. It takes more time itemizing these donations on our tax forms now than it does even to drop them off.

It's just a BAD idea all around.

Todd Pruitt said...

M.M.

Spot on.

The government should be in the business of encouraging charitable giving. This move will absolutely hurt charities and non-profits. But I truly believe that the motive is to make those groups more dependent upon the federal government.