Budget Fact #4: Taxing Charitable Giving

Taxing Charitable Giving

The Facts About The Democrats' Budget:

The Largest Tax Increase In American History: The Democrats' budget will raise taxes by $1.4 trillion over the next ten years.

Taxing Charitable Contributions Will Deter Giving: Included in the Democrats' tax increase is a cap on itemized deductions for charitable giving. By putting a new tax on charitable giving, the Democrats' budget could cost American charities as much as $16 billion a year.

Increasing Taxes On Charitable Giving Comes At A Time When Millions Of Charities Are Struggling With The Economic Downturn: Millions of charities are now struggling with the economic downturn. Taxing charitable giving will only make it worse for these organizations and would cause many to shut down. Charities depend on donations – by lessening the deduction the Democrats’ are discouraging the public from giving.

Even The Democrats' Allies Admit That Taxing Charitable Giving Will Cost Charities Billions: The Democrats' allies are defending the policy on the basis that it will only result in a 1.3% drop in charitable donations. Yet, even 1.3% is a staggering $2.27 billion dollars less for U.S. Charities. That is larger than the entire annual operating budget for the following charities: Boy Scouts of America ($155 million); St. Jude’s Children’s Hospital ($463) and The American Cancer Society ($966 million).

THE BOTTOM LINE: Why Would The Congress Do Anything To Discourage Charitable Contributions At A Time Of Economic Hardship?

What Charities Are Saying About The Democrats' Budget;

Independent Sector President Diana Aviv: "This Could Be A Problem For Many Struggling Nonprofits Vital To Our Communities That Are Already Facing A Very Difficult Fundraising Environment." "Diana Aviv, president of Independent Sector, a national membership organization of charities, said the change 'could be a disincentive to some donors who might further cap their gifts on account of the new limit.' She added: 'This could be a problem for many struggling nonprofits vital to our communities that are already facing a very difficult fundraising environment.'" (Al Kamen, "Giving Till It Hurts," The Washington Post, 2/27/09)

Nonprofit Finance Fraud Chief Executive Clara Miller: "I Think That's The Wrong Loophole To Close If You're Going To Close A Loophole In These Times." (Robert A. Guth and Mike Spector, "Charities Say Tax Changes Add To Pain," The Wall Street Journal, 3/2/09)

Council On Foundations Chief Executive Steve Gunderson: "In These Hard Economic Times, We Need To Make Sure Tax And Regulatory Policy Encourages Growth In Philanthropy." (Stephanie Strom, "Limiting Deductions On Charity Draws Ire," The New York Times, 2/27/09)

What Even Some Democrats Are Saying About The Tax Increases In The Democrats' Budget:

ABC's George Stephanopoulos: Because Of Opposition From Democrats, The Tax On Charitable Giving Pretty Close To "Dead-On-Arrival." "To pay for half of his $634 billion health reform fund, President Barack Obama has proposed limiting itemized tax deductions – from mortgage interest to charitable deductions – for wealthier Americans starting in 2011. The plan may not be dead-on-arrival – but it is pretty close. In my reporting across Capitol Hill today, I couldn't find any strong support for the plan. And it's strongly opposed by several key Democrats on the key Senate Finance Committee, including chairman Sen. Max Baucus, D-Mont." (George Stephanopoulos, "Obama Tax Deduction Plan DOA?" ABC News' "George's Bottom Line" Blog, 3/5/09)

Senate Finance Chairman Max Baucus (D-MT): "I'm Wondering About The Viability Of That Provision." "Sen. Max Baucus (D., Mont.), the Senate's top tax writer as chairman of the Finance Committee, told Mr. Geithner he was especially concerned about paying for expanded health coverage with a deductions curb that 'has nothing to do with health care.' He added: 'I'm wondering about the viability of that provision.'" (John D. McKinnon and Martin Vaughan, "White House Rethinks Tax Hikes," The Wall Street Journal, 3/5/09)

Senator Bob Menendez (D-NJ): "I Don't Want To Prejudge Anything, But It Is Certainly One That I Am Having Difficulties With." (Stephen Ohlemacher, "Key Democrats Oppose Obama's Tax Deduction Plan," The Associated Press, 3/5/09)

House Ways And Means Chairman Charlie Rangel (D-NY): "I Would Never Want To Adversely Affect Anything That Is Charitable Or Good.""President Barack Obama's call to raise taxes on high earners and greenhouse gas polluters met fierce opposition Tuesday from congressional Republicans and also a few Democrats. 'I would never want to adversely affect anything that is charitable or good,' Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said of Obama's call to limit high-income taxpayers' itemized deductions for charitable donations and mortgage interest." (Stephen Ohlemacher, "Obama's Plan To Hike Taxes Meets Fierce Opposition," The Associated Press, 3/3/09)

Representative Shelley Berkley (D-NV): "A Nonstarter." "Rep. Shelley Berkley (D-Nev.) called the proposal 'a nonstarter,' telling Geithner: 'I'd like to think that people give out of the goodness of their hearts, but that tax deduction helps to loosen up their heartstrings.' Outside the hearing, Berkley said the proposed tax increase was 'the number one issue' on the minds of her constituents over the weekend. Reminded that the provision is intended to raise hundreds of billions of dollars to finance an expansion of health insurance coverage, Obama's top domestic priority, she said: 'We can find another way.'" (Lori Montgomery, "Obama Officials Defend Budget," The Washington Post, 3/4/09)

Posted by: Press Secretary