During a news conference Tuesday, President Barack Obama defended his controversial proposal to cap tax breaks for the wealthiest Americans on charitable gifts and use the revenue to help fund his health-care overhaul. While the majority of Americans can write off 28 percent of their salaries in itemized deductions, according to a recent Los Angeles Times article, the wealthiest one percent can currently write off 39 percent.
Obama’s plan would set deduction limits at 28 percent for everyone, including the wealthy. While Obama defends his plan by saying that these limits would equalize tax kickbacks by allowing all Americans to receive the same incentives to give charitably, many in the nonprofit world are worried that this action will make it harder to get donations from wealthy Americans, especially as overall giving has dropped significantly as the economy has soured.
According to a Chronicle of Philanthropy article, those in the nonprofit sector are divided on the impacts of this proposed change. While many think it will lower giving levels, others feel that the effects will be slight, and, as Obama said during his news conference, the economy will be the biggest barrier to donations, not his proposed tax caps.
What do you think? Will Obama’s plan hurt charitable donations, or do the country’s economic problems overshadow the possible results of this change? Are the benefits that America will see from a health-care overhaul worth the possible strain these cuts may put on charitable giving?