Will President Obama Restrict Charitable Contributions?
By Dennis Watkins, Legal Counsel, Church of God
In an effort to educate our constituency, we are making you aware of an issue that is under consideration in Washington, DC. Under a new Obama administration proposal, the value of itemized deductions for charitable contributions for higher wage-earners will go down. The purpose of this reduction is purportedly to pay for new healthcare initiatives, according to administration officials.
Under the plan, there would be a cap on itemized deductions for mortgage interest and charitable donations for families making $250,000 and above. The administration hopes to generate approximately $300 billion in new taxes over ten years, and the plan would go into effect in 2011. Under the plan, a donor in the highest tax bracket would receive a deduction of $280 on a $1,000 charitable donation, instead of $396.
The administration has met strong resistance not only from Republican lawmakers, but also from Democratic Party leaders. Opponents say that the proposals to limit deductions and raise taxes will reduce charitable giving by literally billions of dollars. This also could lead to a question as to whether or not the administration may actually be planning for further charitable contribution reductions in even lower tax brackets in the future.
Initial opposition to the plan has been so vocal that many Washington observers are of the opinion that the plan is “dead on arrival” legislatively, but in a news conference last week, President Obama defended the plan as merely impacting only the wealthy. He even used himself as an example of one of the few Americans that actually would be affected by this plan. The administration also has received opposition to this plan because some believe that the reduction of the mortgage-interest deduction will hurt the housing industry at a time when it needs help the most.
We will attempt to keep you advised as to developments regarding this public issue.
