Religious bodies oppose lower tax deductions

February 22, 2011

For the third time in three years President Obama's proposed budget
will attempt to reduce tax deductions for high-end charitable donors,
and for the third time nonprofits and religious organizations are
pushing back.

Many religious nonprofits, which supplement their
budgets heavily with donations from wealthy donors, are concerned that
reducing the tax write-offs for charitable donations will cause a
decrease in giving, said Diana Aviv, president and CEO of Independent
Sector, a coalition of nonprofit organizations.

"The question is,
do tax incentives work, do they stimulate more money than they cost?"
Aviv said. "Experts estimate that this proposal could reduce charitable
giving by $7 billion."

Obama's proposed budget for fiscal year
2012 includes a 30 percent reduction in itemized deductions for
high-income taxpayers. Individual donors making more than $200,000 or
families earning more than $250,000 would be able to claim just 28
percent of any donation as a tax deduction rather than the current 35
percent.

That would mean that a wealthy taxpayer who donates
$10,000 to a charity would be able to claim a deduction of only $2,800
on his taxes, rather than $3,500.

Obama has defended this
reduction several times, most recently at a White House press conference
on February 15. "When it comes to the long term, when maintaining tax
breaks for millionaires and billionaires will mean additional deficits
of a trillion dollars—if you're serious about deficit reduction, you
don't do that," Obama said.

As in years past, the Union of Ortho­­dox Jewish Congregations of America is again a vocal opponent of Obama's plan.

"The
proposal to reduce the rate of tax deductibility for contributions is a
recipe for disastrous displacements and cuts in much-needed nonprofit
sector institutions and services," Nathan Dia­ment, the union's director
of public affairs, said in a statement.

Several studies have
researched the potential outcome of similar proposals and all concluded
that there would be a decline in donations, although dollar estimates of
the decline varied.

A reduction similar to the one proposed
occurred between 2002 and 2003, when the top income tax deduction for
donations was lowered from 38.6 percent to its current 35 percent. After
that reduction, individual charitable contributions actually
in­creased, according to the Obama administration.  —RNS