Obama Defends Push to Cut Tax Deductions for Charitable Gifts
In a move to create a new incentive for charitable giving, Democratic Sens. Charles E. Schumer (N.Y.), Carl M. Levin (Mich.) and Debbie Stabenow (Mich.) said yesterday that they have introduced legislation that would simplify the tax code to spur private foundations to give more money to charities. The bill would replace the current two-tiered system for taxing foundations on their investment income with a single tax rate, in part because lawmakers say the current system punishes foundations for years in which they give away more than usual.
Nonprofits such as universities and arts institutions that rely heavily on large donations from wealthy individuals are more likely to be affected by the administration's proposal than are food banks, shelters and other social service groups that raise money in smaller amounts.
Dean A. Zerbe, managing director of Alliant Group and a former senior tax counsel to the Senate Finance Committee who closely tracks the nonprofit sector, said he has no doubt that Obama's proposal would change wealthy donors' behavior.
"Of course it's going to affect behavior," he said. "The charities recognize that. Everyone does. . . . People just don't have their feet on their ground if they're not recognizing that reality."
Still, Obama argued that the deduction is not the primary reason people donate to charities and that his proposal would not deter giving.
"Now, if it's really a charitable contribution, I'm assuming that that shouldn't be a determining factor as to whether you're giving that $100 to the homeless shelter down the street," he said.