Friday, October 5, 2012

Will Romney Cap Charitable Deduction?

During an interview Monday with a Fox affiliate in Colorado, Republican presidential candidate Mitt Romney suggested that, if elected, he would consider placing a $17,000 cap on charitable deductions for middle-class families.

As reported in The Wall Street Journal, Romney also said that this cap would be lower for wealthier individuals. The Republican candidate has previously stated that he would cut tax rates across the board by 20 percent, and would limit or end other tax breaks as a way to pay for this change. His new focus on deductions would be another way to generate revenue to pay for the tax breaks.

"You could use your charitable deduction, your home-mortgage deduction, or others—your health-care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way," Romney told Fox affiliate KDVR in Denver. "And higher-income people might have a lower number."

Romney is not alone in proposing limits on charitable deduction. President Barack Obama has repeatedly tried to cap it at 28 percent for families with more than $250,000 in annual income. The attempt has been met with heavy resistance from leaders in the nonprofit sector, who argue that it would cause individuals to give less to charities. In The NonProfit Times' "Platform for the Nonprofit Sector," 22 nonprofit executives once again urged both candidates to avoid caps on charitable deduction.

According to data from the Internal Revenue Service (IRS), about 30 percent of Americans who file tax returns itemize their deductions. The average break for those who itemized in 2009 was around $26,000. In his 2011 tax returns, Romney claimed $2.25 million in charitable deductions.

You can read the full story in The Wall Street Journal.

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