Obama Defends Push to Cut Tax Deductions for Charitable Gifts
Administration officials said the proposal should be considered within the totality of the budget. The policy change would help finance efforts to reform the nation's health-care system, said Kenneth Baer, a spokesman for budget director Peter Orszag.
"Generally what keeps people giving is economic growth, increasing incomes and increasing prosperity, and in totality that's what this budget would do," Baer said. "This change is going to fund health-care reform, and constraining those costs is the single biggest thing we can do to put our country on a sustainable fiscal path and get this country going."
Americans donate about $300 billion a year to nonprofit organizations, according to Giving USA, which conducts annual surveys. But in the current economic climate, many agencies are experiencing a drop in revenue. Many foundations are giving less grant money to nonprofits because their endowments have declined along with the stock market, while local and state governments have also cut back their funding.
Diana Aviv, president of Independent Sector, a national coalition of charities, said any decrease in charitable giving caused by Obama's proposal, no matter how small, would be "seen as a stake in the heart."
"With all other means of income down, the idea that there will be another potential cut to the income of those nonprofit organizations feels catastrophic," Aviv said. "It is utterly unacceptable."
In Congress, members of both parties have spoken out against Obama's proposal since it was introduced last month. House Majority Leader Steny H. Hoyer (D-Md.), in an interview on MSNBC, said: "That's going to be controversial. And, obviously, charitable institutions will be -- have great concern. Clearly, one of their greatest concerns will be very, very large-income donors who make very substantial contributions to very worthwhile enterprises."
House Minority Leader John A. Boehner (R-Ohio) said in a statement yesterday that limiting charitable tax deductions to 28 percent "is absolutely the wrong thing to do. The administration should reverse course on this reckless policy that will hurt too many universities, churches and other charitable organizations."