As the debate over the so-called "fiscal cliff" rages on in Washington, D.C., some in the government are setting their eyes on the charitable deduction. They argue that eliminating it will raise revenue for the government. In a new opinion column posted on our website, our editor-in-chief, Paul Clolery, wrote that this is exactly the wrong approach to take. Here's an excerpt from his piece:
Advocacy organization Independent Sector has statistics that its
executives trot out, showing the benefit of a $350 tax break is actually
$1,000. They have argued that itemizing households accounted for 70
percent of the $229 billion in charitable donations in 2008 and that 2
percent of taxpayers in the top bracket were responsible for 33 percent
of all charitable giving that year.
Here’s the kicker: Only
one-third of tax filers, the wealthiest Americans, itemized deductions
that year. Congressional and White House officials argue that capping
the deduction for the wealthiest Americans won’t really hurt that much,
after all, charity at the highest levels is a competition for names on
buildings and board seats at the opera.
The government officials
probably didn't read a Bank of America study that showed 67 percent of
wealthy households responded that they would somewhat or dramatically
decrease charitable contributions if they received zero income tax
deductions for their donations.
Government officials argue that
the $16-trillion debt and $1.3-trillion budget shortfall has to be made
up somewhere. They should start with cutting a budget few of them have
probably even read.
The loud rancor of the debates has already
affected how people spend, share and shelter their assets. Many more
affluent Americans are already making early decisions around their
income, deductions and possible tax implication now. That must also be
affecting Sandy donations. That’s the simple math part.
observation element is that giving to Sandy relief is lagging because
those 1 percenters always being singled out as villains are spending
their money putting their lives back together. It is estimated that
600,000 homes were damaged or destroyed across New York, New Jersey and
Those rich guys working on Wall Street or with
information technology or investing in real estate along the east coast
do not have the cash to donate as they usually do. They are who is
missing from the fundraising effort. If the deduction is taken away,
they will stay away longer.
You can read the full piece on The NonProfit Times' website.