Obama Budget Devalues Charity

President Obama’s proposed budget is a bold and massive affair which will influence the future of this nation for many … Continued

President Obama’s proposed budget is a bold and massive affair which will influence the future of this nation for many years to come. Is it the best thing for the country? No one can be sure. Is there wasteful spending, about equally divided between Republicans and Democrats? Yes. Does it err in its approach to charitable giving in America? In my opinion that would have to be a “yes” as well.

Under this budget, Americans making $250,000 or more a year are going to see the deduction value of their charitable donations go down from 35% to 28%. So, for example, a person making a $10,000 contribution to a charity would, under the Obama proposal, receive a tax deduction of $2800, as opposed to $3500. Does that really matter? It sure does, and not because I worry about the impact of those lost dollars in the lives of those fortunate enough to be in the position to make such gifts. Though, I don’t want to be casual with other people’s money, either.

It matters because just as we are being told that recovery will require an unprecedented partnership between the public and the private sector, the administration devalues individual charity. That is not smart and it is not right. OMB Director Peter Orszag and his crew of what my friend Nathan Diament of the OU’s Institute for Public Affairs calls, the “green eye shade folks” (apparently that’s slang for accountants, and since I just learned that, I thought I would share) really messed up on this one.

It’s not that this change will cripple philanthropy — most studies indicate, it almost certainly will not. But even the results of those studies are questionable. They are based on how donors respond to questions about the importance they place on the deduction which they can take, as a factor which influences their giving. Without doubting the honesty of their responses, I am not sure that anyone will be fully candid even with themselves, about how such ulterior motives shape their philanthropic decisions.

And even if most givers, in reality, do not place great importance on the deductibility of their gifts, the President’s proposed change in the tax code does equate the value of charitable giving with all other deductible expenses. At precisely the moment when we need to reaffirm the importance of individuals stepping up to address those in need, this does the opposite – literally devalues charitable giving, even if it does not threaten to undermine it. Not only is that bad public policy, it undermines the President’s vision for our future as a nation.

As President Obama has told the nation many times, we must not give in to fear in the midst of financial crisis. He is so right about that. So why not do everything in our power to encourage people’s personal generosity at just the time they may feel too afraid to give?

About

Brad Hirschfield An acclaimed author, lecturer, rabbi, and commentator on religion, society and pop culture, Brad Hirschfield offers a unique perspective on the American spiritual landscape and political and social trends to audiences nationwide.
  • PallasAthena09

    I am going to keep this short and simple.If people are solely giving to charity because they are looking forward to the tax deduction—then it is not really pure of thought and heart. When u give, you give without thinking about how it is profitable to you or how much you can take off in taxes by it. Giving is giving and if people are giving less then so shall it be! it is from the heart that should only matter. Honestly, this is a contradiction when the Salvation Army reported that in middle class and poor communities they find that people give more compared to those of wealthy community anyways.It seems the poorest give more than the wealthiest when you boil it down to percentage of income. thank you for your thought on this topic. I enjoy reading you Rabbi! Love and Blessings!

  • mmm1110

    Obama’s partial elimination of the tax deduction for charties means I will be giving less. It was a stupid move on his part, and he will see that charities will suffer.

  • rkerg

    I would say that anyone who lets the fact that he might get a bit less of a tax break for donating to a charity is not a very charitable person. Please, do you realize the percentage of taxpayers for whom the giving of $10,000 in a single year to a charity is impossible? Try living in the real world for a change.

  • threeoaksgone

    It’s certainly true, as you admit, that overall, people won’t give less just because their deduction is less. But you just repeat the error when you suggest that charitable giving, for moral reasons, should reap a larger benefit for the donor than “other deductions.” Seems to me the idea of charity is that the donor doesn’t reap benefits beyond psychic ones. Let me agree with Pallasathena here too: the poor give more than the rich, something I discovered in college while collecting door to door for a charity years ago; in poorer areas people would dig into their pockets to pull out a dollar or even a couple of quarters, but they would give something; in better-off areas, we might get some larger deductions, but we also got nothing at all in many cases.Finally, you may want to learn to spell Orszag.

  • krankyman

    For those who give from a moral conviction i.e. religious values this will have little affect.For those who give for tax purposes they will simply find new tax shelters and move on. I see this as part of a sinister plot to federalize our entire society and move all power from the individual to a centralized government.Want med care? Go see the Fed approved doctor who will have to report everything about you into a computerized med record system controlled by the Fed.If you are a charitable organization and you seek funds then go to the Feds. You’ll have to fill out their forms and obey all their dictates.You want free speech? Make sure what you say is approved by the Fed government or jail for you.Want to freely associate with your friends and discuss issues? Be careful you don’t use electronic media or the Fed government through FISA will listen in.Finally, what I find ironic and so distasteful about the subject of charity is that Democrat Pols talk so much about and yet do so little personally. Everyone of them is a multi-millionaire yet they give almost nothing personally. They talk a lot but only to get their name in the paper; they then tax-rape the citizen to support their cause.

  • LillyP

    People who donate to charities just for a tax deduction are not generous and actually do not care about others or charity. Giving with the hope of getting something back is actually a selfish act. Working and middle class people contribute much more than the wealthy who (as we’re learning from Obama’s failed cabinet appointees) go out of their way to avoid paying taxes and hire the best accountants to find every loophole. “So why not do everything in our power to encourage people’s personal generosity at just the time they may feel too afraid to give?” Well, Rabbi, you could have used this column to do everything in your power to encourage people to love thy neighbors and practice generosity, but you didn’t.

  • maxmillian1

    Hate to burst your bubble folks, but the wealthiest 5 to 10 percent not only pay 75% of the taxes, they also donate the vast majority of money to charities. The reason wealthier people don’t give to you when you go door to door is because they donate through documentable methods that allow them to write off the contributions. Otherwise they donate to you and then get taxed on that money at twice the rate you are taxed. We have a system that encourages charitable giving because charities have long been deemed a societal good. Hopefully this is not yet another step in a carefully orchetrated campaign to remove religious organizations and their influence from our judeo-christian culture. But I’m sure the militant atheisists who respond to this post will erase any doubt about that.

  • Paganplace

    Rich people giving ‘for influence,’ Maximillian, isn’t something we need to subsidize. At once they’re so noble and selfless, and at the same time won’t do it if they don’t get to drop a tax bracket by doing it?Frankly, some multibillion-dollar corporations can monkey this system to end up paying no taxes at *all…* I see no reason to corrupt your Calvinistic superiority with making the public subsidies of it a little less lucrative.

  • Skowronek

    “the President’s proposed change in the tax code does equate the value of charitable giving with all other deductible expenses.”That doesn’t sound like it’s devaluing charitable giving, it’s simply making it less of a loophole (for those who earn what seems to me a large sum of money). Or maybe in order to get the same sort of write-off, they’ll have to donate more.We don’t come anywhere close to $250K/year crowd, so it doesn’t affect me or my 1040 at all. So I’m probably overlooking something fundamental.If you’re giving for the write-off, you may “have to” give more. If you were giving out of conviction to the charity or charities of your choice, and the household income is less than 250K, it’s doubtful it will affect your outlook. Unless your household is one of those who are experiencing rocky financial times right now. (In which case, I wish you well and I hope things improve for us all, soon.)

  • markhemmen

    It’s part of the socialist plan to remove all non-government influences from society. Big targets, of course, are all religious groups. Obama is just marching to George Soros’ orders.

  • cds2

    How many of the posters here work in the non-profit world? How many have tried to create or run a non-profit? Almost all the comments here are about the donors, and not about the charities being supported and the impact to them. I am the co-founder of a small non-profit. I have volunteered an enormous amount of time for almost 7 years as well as donated a significant amount of money. I know many people in non-profits who work selflessly towards their mission, often volunteering or getting paid substantially less than they could make in the commercial world. Non-profits need major donors to survive. They need small donors too, and in our case grants as well. While I believe that people will continue to donate under this plan, I agree with Brad Hirschfield that it is a disincentive, and that it sends the wrong message about what we value as a society.

  • Athena4

    Let’s face it, this thread is just another excuse for the Dittoheads to claim that Obama is a “socialist”. As if you people even know what socialism is. Sweden is a socialist country, and it hasn’t stopped wealthy people from giving heavily to charities – i.e. the Ikea corporation. Most people who are really fantastically wealthy tend to donate through endowments or foundations, i.e. the Bill and Melinda Gates Foundation. They set up a separate entity to do their corporate donations rather than write a check. These foundations then give the money to charities based on grant proposals and the founders’ own priorities. People who are in the upper echelons of individual donors get a wide variety of perks, too. They get their names in programs, get things named after them, or are put into a special category of sponsor. When you get to that point, you’re not just donating to do good, or for the tax break. You’re donating so that everyone else knows that you’ve dropped a chunk of change on this charity. (A college/university, the symphony, Special Olympics, etc.) Really, the tax break is the least of their incentives. It’s doing well by doing good. These are the folks that the Obama budget is targeting, not the average person. It’s the people whose names are on the dedication plaques. And yes, hubby and I do give a lot to charity – especially this last year. Part of the reason was to counteract a windfall that we’ll be taxed on. But it’s mostly because there’s a lot of people hurting out there, and those of us who aren’t hurting need to pitch in and help them out.

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