For all the discussion about how a cap on the charitable deduction would affect giving, it seems like proposed tax hikes by the Obama administration might have an even bigger impact. According to a study by the Center on Philanthropy (CoP) at Indiana University, itemized giving would decline if the Bush-era tax cuts are allowed to expire after next year. Giving by households would have seen a decline in giving by 1.6 percent in 2009 and 2.4 percent in 2010 if both policies had been in effect. Total itemized giving would have declined by 0.4 percent in 2009, 1.3 percent in 2010.
These numbers may represent a relatively small direct impact on giving but Patrick Rooney, executive director of CoP, explains that the numbers become more significant when you take into consideration "the weak economic climate, funding reductions and increased demand for services" that are already impacting nonprofits across the country.
The Bush tax cuts were extended through 2012 for all taxpayers last year. The Obama administration still argues that those tax cuts should be eliminated for households making more than $200,000. This puts the president on yet another collision course with Republican, and some Democratic, lawmakers who believe that the tax cuts should be made permanent for all households. You can get the full scoop on the CoP study in The NonProfit Times.