Charities Lobby Congress
With the fiscal cliff looming and cuts on their way nonprofit organizations are descending upon capital hill to defend the charitable deduction tax credit.
Countless charities fear that the charitable deduction may be at risk and argue that cutting this tax credit to their groups they may be harming those that need the services these charities provide the most. By cutting these deductions charitable contributions may dry up effecting those most in need.
“Over the last three years, I’ve never been more worried than I am now, partly because Congress is under enormous pressure to find new sources of revenue,” said senior vice president of United Way, Steve Taylor.
President Obama, who once proposed this sort of deduction, came to their aid arguing that if these deductions were struck from the code or reduced that “every hospital and nonprofit agency across the country would find themselves on the verge of collapse.”
The president is proposing raising taxes on those individuals making $250,000 or more with a lot of pushback from Republicans. Republicans want to eliminate tax breaks and loopholes and keep the tax breaks on the wealthy citing their plan will save $800 billion dollars in tax revenue over the life of the plan.
The GOP remains vague on which deductions they will limit but Obama thinks the charitable deduction may be on the chopping block in their plan.
“There’s been a lot of talk that we can raise $800 billion or $1 trillion in revenues just by cutting loopholes,” Obama said. “But … the only way to do that would be if you completely eliminated, for example, charitable deductions.”
With the fiscal cliff looming both parties seem awash with ideas to curb our deficit and raise revenues.
Nonprofits argue that reduction of this deduction would be “catostrophic” and result in a “real fundamental change in our culture”. Charities receive about $300 billion a year through the act of giving. The deduction tax credit was meant to stimulate charitable contributions and from the looks of that number it looks like it is working.
A CBO report estimated that by eliminating the charitable contribution deduction the government would raise about $230 billion dollars over the next 4 years if giving levels were to remain constant.
The great recession led to dips in the amount of giving declining 7 percent in the last few years for wealthier households.
President Obama proposed capping itemized deductions to 28% of an individuals income down from the 35% it is now. This would obviously hit other deductions as well but charities are real nervous that this reduction will lead to hard times. .
