...And the impact could be as high as $16 Billion per year
President Barack Obama unveiled in his budget a plan that will slash the charitable deduction for single taxpayers making $200,000 or more and married couples making $250,000 or more. This tax increase will deal a serious blow to charities in this country that are being increasingly relied on to help people during this economic down turn.
Americans gave $147.7 billion in charitable donations in 2006. (IRS data)
$81.2 billion, or 46.4%, of total charitable deductions claimed in 2006 were by taxpayers making more than $200K. (IRS data)
$59.2 billion, or 33.8%, of total charitable deductions claimed in 2006 were by taxpayers making more than $500K. (IRS data)
Impact on American Charities Could Be As High As $16 Billion Per Year
Administration allies are defending the policy on the basis that it will only result in a 1.3% drop in charitable donations (http://www.cbpp.org/3-3-09bud.htm). 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 of the following charities:
Boy Scouts of America total expenses for 2007 - $155 million (IRS form 990);
St. Jude’s Children’s Hospital total expenses for 2007 - $463 million (IRS form 990);
The American Cancer Society total expenses for 2007 - $966 million
However, other respected economists believe the impact could be far worse. Bloomberg published astory quoting Jon Bakija, an economics professor at Williams College in Williamstown, Massachusetts, and Treasury Department economist Bradley Heim who recently estimated that top earners reduce their donations by between 0.5 percent and 1 percent for every percentage-point increase in giving costs. According to the article, “That means charitable giving may be reduced by between 10 percent and 20 percent under Obama’s proposal, Bakija said in an interview.” That works out to a reduction of between $8.1 billion and $16.2 billion in charitable contributions each and every year under the Democrat budget proposal.