If passed, President Obama's $447 billion jobs bill would limit the charitable deduction for wealthy donors — a development many nonprofit leaders say would cause wealthy donors to reduce their giving to charitable causes, the Chronicle of Philanthropy reports.
In the president's plan, write-offs for itemized deductions would be limited to 28 percent of a filer's income. According to the Chronicle, the plan, which applies to married couples with an adjusted gross income of at least $250,000 and individuals with a gross income of $200,000, would generate $400 billion in additional revenue over the next decade. Wealthy donors currently are allowed to deduct 35 cents of every $1 they contribute to charity.
As have similar proposals by the Obama administration in the past, the latest plan was widely criticized by nonprofit leaders, who argue that limiting the value of itemized deductions will cause wealthier donors to reduce their charitable giving, which in turn would force nonprofits to cut jobs at a time when the president is seeking to create jobs and boost the economy. "Limiting the itemized deduction would certainly lead to a significant decrease in charitable contributions," said William C. Daroff, vice president for public policy at the Jewish Federations of North America. "If charities have less resources, they'll be forced to choose between laying off employees or cutting needed services."
However, supporters of the bill argue that the proposal will benefit charities. "Charitable organizations need to look at both sides of the ledger," Center on Budget and Policy Priorities senior fellow Paul Van de Water told the Chronicle. "Getting out of the recession would be a big benefit for charitable organizations of every sort. If the economy doesn't recover, the effect of the weak economy on charitable giving is going to be much more severe than the modest effect of this particular proposal."