Jobs Bill Would Reduce Contributions to Charities
October 12, 2011
President Obama revived one of his favorite revenue-raising proposals in his recent jobs plan: limiting the itemized tax deductions that "millionaires and billionaires" (defined as individuals earning over $200,000 or couples earning more than $250,000 per year) can take for mortgage interest, state and local taxes, and charitable contributions, says Craig D. Eyermann, an Independent Institute Research Fellow.
By the White House's calculations, this modest move would raise 86.9 percent of the $467 billion needed to pay for the jobs plan over the next 10 years. While the White House's revenue calculations are highly questionable, what aren't questionable are the consequences of the president's proposal.
- According to Internal Revenue Service figures, individuals claimed nearly $34.9 billion in charitable deductions on their federal tax returns in 2009.
- Households reporting $200,000 or more in annual income claimed $19.14 billion, or 54.9 percent, of these deductions.
At least some well-to-do households will reduce their charitable donations if the tax deduction is cut, because more of their money will go to government, making less available for charity. Indeed, a 5 percent reduction in charitable giving by those claiming a tax deduction in 2009 would have reduced total contributions by $957 million. A 20 percent drop in giving would have reduced charitable contributions by $3.8 billion.
That's a huge price to pay for short-lived "stimulus" jobs, says Eyermann.
Source: Craig D. Eyermann, "Don't Be Charitable About Jobs Bill," Sacramento Bee, October 5, 2011.
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