Wednesday, February 29, 2012

Hawaii Nonprofits Fighting Against Itemized Deduction Caps

Hawaii nonprofits are pushing back against a 2011 law that they say will discourage charitable giving for the local population.

The Pacific Business News reported yesterday that local nonprofits, led by the Hawaii Alliance of Nonprofit Organizations, asked state lawmakers to remove a provision in a State Senate bill that places a cap on the amount of itemized deductions can claim on their charitable contributions.  The cap applies to individuals that earn an adjusted gross income of $100,000 or more, a joint or surviving spouse that earns $200,000 or more, and a head of household that earns $150,000 or more.

Nonprofits say that these caps will remove a big tax incentive to give for wealthy individuals.  The thought is these people would be more willing to spread their money around via large donations to charities.  While this is certainly not the only reason people give donations, nonprofits say that it does help boost giving.

The issue of charitable deduction has been national in recent months.  President Barack Obama has repeatedly tried to cap it, most recently in his latest federal budget proposal.  He had last tried to insert it in the American Jobs Act he proposed last fall.  That provision was eventually pulled from the bill by Senate Democrats.  An October 2011 study by the Center on Philanthropy at Indiana University estimated that itemized giving would decline by nearly $800 million in the first year if Obama's proposal were to have been instituted.  That decline would increase to $2.43 billion in the second year.

You can read the full article on this story on The Pacific Business News website.

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