Obama Jobs Bill Would
Curb Charity Tax Breaks
By Lisa Chiu
and Suzanne Perry
WASHINGTON
President Obama last week
renewed his effort to reduce
the federal income-tax breaks
wealthy donors receive for charitable gifts by including a measure in his proposed $447-bil-
lion jobs bill that would place
limits on write-offs for itemized
deductions.
Mr. Obama suggested that
the nation’s wealthiest people be
allowed to write off just 28 percent of the money they spend on
The president’s jobs
bill would trim the
value of tax write-offs for the richest
Americans.
charitable giving, housing, and
other items they are allowed to
deduct on their taxes. Now they
are allowed to write off up to 35
cents of every $1 they spend.
In effect, Mr. Obama’s plan
means that a donation of
$100,000 would save these do-
nors $28,000 in taxes, $7,000
less than they would save to-
day. The plan, which would
take effect in 2013, would apply
to married couples with an ad-
justed gross income of at least
$250,000 ($200,000 for individ-
uals) and would provide rough-
ly $400-billion for the federal
government over 10 years, the
White House said. It would not
affect the deduction taken by
people who earn less.
Tax Cuts for Employers
The jobs bill does include
a number of tax breaks that
would help nonprofit employers. They include cutting the
Social Security payroll tax in
half next year for up to $5-mil-
lion in wages and temporarily
eliminating the payroll tax for
up to $50-million in salaries of
new workers and raises for current workers.
Employers could also get pay-roll-tax credits of $2,400 for
hiring a veteran who has been
unemployed for at least four
weeks, $5,600 if the veteran has
been out of work for at least six
months, and $4,000 for hiring
any other individual who has
been unemployed for at least
six months.
Opposition From Charities
But the president’s plan is
likely to face stiff opposition
from nonprofit leaders. They say
that limiting the value of the
UPI/KEVIN DIETSCH
President Obama’s measure to increase jobs in the United States
would provide benefits to charities that hire new workers.
tax break would cause wealthy
people to reduce their giving.
In turn, some charities would
be forced to cut jobs just as the
president is seeking to increase
employment.
“Limiting the itemized de-
duction would certainly lead to
a significant decrease in chari-
table contributions. If charities
have less resources, they’ll be
forced to choose between laying
off employees or cutting need-
ed services,” said William C.
Daroff, vice president for public
policy at the Jewish Federations
of North America. “Nonprofits
employ almost 10 percent of the
work force nationwide, and in
many states nonprofits are the
largest employers. In our view,
cutting the deduction is like
cutting your nose to spite your
face.”
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‘Modest’ Effect
Proponents of the plan, however, say the White House’s proposal will help charities.
“Charitable organizations
need to look at both sides of
the ledger,” said Paul Van
de Water, a senior fellow at t
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a big benefit
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he Center on Budget and Policy
Priorities, a liberal think tank
in Washington. “Getting out
of the recession would be a big
benefit for charitable organiza-
tions of every sort. If the econo-
my doesn’t recover, the effect of
the weak economy on charitable
giving is going to be much more
severe than the modest effect of
this particular proposal.”
The proposal is the same plan
that President Obama outlined
in the spring as a way to cut the
budget deficit and earlier in his
presidency as a way to pay for
the health-care bill.
Nonprofit groups said they
are prepared to fight the idea
again.
“We have seen this proposal
before and we were able to defeat it,” Mr. Daroff said. “And
while we don’t look forward to
the fight ahead, we are up to
the challenge.”
