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Analysts: Giving by Wealthy Would Decline Slightly Under Obama Budget Proposal

By Philip Rucker
President Obama last night defended his controversial budget proposal to cut the rate for charitable tax deductions for wealthy people, arguing that the policy shift would not have an adverse effect on charitable giving.

"If you look at the evidence, there's very little evidence that this has a significant impact on charitable giving," Obama said in his second prime-time news conference.

Under Obama's proposal -- which has drawn criticism in Congress from Democrats and Republicans alike -- the tax deduction for those with incomes over $250,000, which currently is 35 cents for each dollar donated, would be capped at 28 cents on the dollar. This would return the rate to where it was during President Reagan's administration.

Obama said this would help equalize the tax break for those donating to charity. "When I give $100, I'd get the same amount of deduction as when some -- a bus driver, who's making $50,000 a year, or $40,000 a year, gives that same $100," Obama said.

But two independent analysis centers concluded that the administration's proposal could decrease giving by as much as $3.87 billion to the nonprofit sector, which already is struggling to raise funds during the economic recession. Americans donate about $300 billion a year, according to Giving USA, which conducts annual surveys.

The Center on Budget and Policy Priorities said total charitable contributions would decline by about 1.3 percent, while the Center on Philanthropy at Indiana University calculated that overall giving would drop by 2.1 percent (PDF). The highest-income households would decrease giving by 4.8 percent, or $3.87 billion, the philanthropy center found.

"Charities and the public need to understand that in the current economic environment, which is creating difficulty for some nonprofits and their constituents already, this public policy change is likely to have an additional negative effect," Patrick M. Rooney, the philanthropy center's interim executive director, said in a statement. "However, changes in personal income and wealth, both of which have declined in the past year, have a greater impact on charitable giving than do tax rate changes."

Experts said nonprofits such as universities and arts organizations that rely heavily on large donations from wealthy individuals are more likely to be impacted by the administration's proposal than food banks, shelters and other social service groups that raise money in smaller amounts.

Dean A. Zerbe, managing director of Alliant Group and a former senior tax counsel to the Senate Finance Committee who closely tracks the nonprofit sector, said Obama's proposal will impact the behavior of wealthy donors.

"Of course it's going to effect behavior," Zerbe said. "The charities recognize that. Everyone does.... People just don't have their feet on their ground if they're not recognizing that reality."

Still, Obama said his proposal should not deter giving.

"Now, if it's really a charitable contribution, I'm assuming that that shouldn't be a determining factor as to whether you're giving that $100 to the homeless shelter down the street," Obama said.

Posted at 11:28 AM ET on Mar 25, 2009  | Category:  The Budget
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Difference between USSR Communist media and USA "mainstream media"

In Russia government make media say what they want - even if lie. In USA "Mainstream media" try make government what they want - even if lie.......eventually they become same thing?!

Thank you Mr Murdoch for giving us the real news. May be the only thing to protect us from the above!

I Igor produce Obama Birth Certificate at www.igormarxo.org

Posted by: igormarxo | March 25, 2009 7:42 PM

slightly? i have spoken to some of my contacts at www.affluence.org and i know they plan on cutting back more than just slightly- and these are some of the most wealthy people in the world. if you take away 20+% on top of what you already pay, it's hard to give more!

Posted by: kyleeschen | March 25, 2009 6:17 PM

scrivener50:

I hope you are calling every ACLU branch every day!

Gator-ron:

Fine, I agree with you that Obama is tyhe best President we've ever had -- are you satisfied -- now you are going to have to re-think that position yourself.

Posted by: JakeD | March 25, 2009 5:20 PM

Dedicated to "rogue" JakeD...

SUSPECT BIG BROTHER INTERNET / TELECOM SPYING OR MALICIOUS INTERFERENCE -- USING YOUR TELECOMMUNICATIONS TO HARASS YOU?


Do something -- tell your story to the American Civil Liberties Union (link below).

And read in the "comments" section the ongoing account of a journalist in search of his First and Fourth Amendment rights -- free speech and freedom from unreasonable searches and seizures.

Then demand that ACLU renew its free speech fight by filing a class-action suit against unconstitutional, rogue government surveillance operations.

http://blog.aclu.org/2009/01/26/internet-filters-voluntary-ok-not-government-mandate/#comments

Posted by: scrivener50 | March 25, 2009 5:12 PM

Gator-on, JakeD likes the word "canard" a lot. Like you, I'm not sure he has an entirely accurate grasp of its meaning. There's also, of course, a huge amount of obvious irony in his affection for the word.

Posted by: nodebris | March 25, 2009 5:07 PM

While it is true that a slight decline in charitable giving may occur under the Obama budget what really hurts all non-profits especially the small or grass roots organizations in the overall economy. In order to be successful most of them depend on the generosity of large numbers of small donors who give from the goodness of their hearts. The amount of giving for them is contingent on their economic security and their disposable income. If the President's plans can restore confidence in the economy, charitable giving won't suffer and it is misleading for opponents to pretend otherwise.

Posted by: lscott2 | March 25, 2009 4:44 PM

Charity is only a political tool for those who feel that way. Those who give to charity to improve the human condition rather than to strengthen their political cause are not giving charity, they are making a political contribution under the guise of a charity. That kind of giving is very Republican.

What is incomprehensible to you Jake D is that someone would give purely to improve the condition of others. Your allocation of Republican Charities is a 21st century perversion of the concept of charity. Charity as I have seen it more often than not is an expression of a need for recognition that one is a better person than the giver assesses himself or herself.

JakeD, your use of the word canard is inappropriate since I was not giving a story or a rumor, only an interpretation. You may feel that it is inaccurate. But I hardly think that a narcissistic person is capable of self-examination. I will accept that you do the best you can will the limited interpretive skills that you have. I am relieved that you do not agree with me, I might have to rethink my position if this were not the case.

Posted by: Gator-ron | March 25, 2009 3:58 PM

Although studies have shown that corporate giving and charitable donations from individuals are being negatively impacted by the current economic crisis, the future of nonprofits isn't all gloom and doom.

Recently, the Conference Board released a study to suggest just that. Despite data showing many corporations would spend the same or less money on corporate giving programs, 28% of the companies reported that they plan to increase their 2009 spending on programs focusing on the environment, sustainability and climate change.

I find this interesting, in light of the recent climate change and renewable energy conversations taking place on Capitol Hill and in the nonprofit/for profit sectors.

All hope is not lost...

Posted by: ragini78 | March 25, 2009 2:49 PM

Posted by: nodebris | March 25, 2009 1:41 PM
=====================
Oh please you're one of the mindless tools I've seen touting the "tax breaks for everyone under $250K" which nearly EVERY ECONOMIST ANALYST HAS SAID IS IMPOSSIBLE.

Even if the government confiscated every dollar about $250K it wouldn't nearly pay for the proposed budget and programs. Obama will be trying to squeeze every dollar from everyone above $30K to have a chance of paying for his budget.

I don't expect you to hurt your brain trying to think rationally and logically about the budget and the realistic tax burden to make it feasible.

Posted by: Cryos | March 25, 2009 2:34 PM

Republican causes would be hurt more because Republicans give more to charity. As for complaining about the cost of the White House only after Obama was elected, I didn't know that's how much it cost until then. Next canards?

Posted by: JakeD | March 25, 2009 2:33 PM

Oops typo.

His budget is totally UNrealistic and he is straight lying to the american people.


Oh added note. Funny how liberals always brought up Warren Buffett but now you never hear his name. Maybe its because Buffett thinks Obama's economic ideas are horrible.

The co-owners of the democratic party Soros and Buffett are investing instead overseas.

Posted by: Cryos | March 25, 2009 2:10 PM

"Obama said this would help equalize the tax break for those donating to charity. "When I give $100, I'd get the same amount of deduction as when some -- a bus driver, who's making $50,000 a year, or $40,000 a year, gives that same $100," Obama said."
=========================
And you liberal tools still try to claim he isn't a marxist LOL.

Simple fact is Obama needs to squeeze every dollar out of everyone he can to pay for his mommy government. He already hiked up cigarette taxes 61 cents a pack. I'm sure that's really a help to the poor.

His budget is totally realistic and he is straight lying to the american people. Research shows even if he confiscated every dollar above $250,000 it could not pay for his budget proposals.

Therefore logic dictates (sorry liberals I know logic makes the blind utopians upset) the ONLY way we will not have massive deficits and devaluation is if he taxes the heck out of anyone down to the level of probably $30K.

Oh by the way how do you liberals like the fact there is a moratorium on workplace raids? The democrats who care about you so much are lowering the quality of your healthcare and giving away your jobs for the prospect of several million votes. Pelosi's statements lately show what she really thinks of americans. You must be proud liberal leaders have sold out your children.

Posted by: Cryos | March 25, 2009 2:08 PM

I know it is too much to ask, but what assumptions did these group use to come up with their conclussion? Wall Street has shown that you can a form a sophisticated model to come up with an exact number. But if your assumptions are faulty your final number are also incorrect.

Posted by: jerry_mus06 | March 25, 2009 1:49 PM

Obama's quip that the best inducement for more charitable giving is a good economy. Change the tax policy and if it is self defeating stop it. In the mean time the revenues of the Treasury goes up and the deficit is cut.

JakeD, your comment of 12:43 acknowledges that you believe that Republicans will be more influenced by the tax consequences than Democrats. You profess to be an independent so what do you care whether it is Republican or Democratic causes that are effected?

You do not understand how much your post reveals about yourself and your ilk. You project your thinking on to Obama and assume that he is as petty and conniving as you are.

If I were you I would be mortified. But you are so narcissistic that it will just roll off you back.

Posted by: Gator-ron | March 25, 2009 1:44 PM

It's clear that JakeD's primary concern is with tax breaks for the wealthy, or the 30% drop in charitable giving due to Bush's crashed economy would concern him far more than a theorized 1% drop due to adjusting the deduction for wealthy individuals in order to help fix the economic crisis causing that 30% drop.

Although he's been posting here for a very long time, I notice he only became concerned about the cost of the White House after Obama got elected. Consider what this says about the good faith in which he offers this, or any other, complaint.

He has a real dilemma. Should he proffer transparently cynical "complaints" such as the cost to run the White House, or stick with blatantly moronic issues like the Birth Certificate one he so cherishes? Cynical or Stupid: the constant dilemma of the far right.

No problem. He'll chose: both.

Posted by: nodebris | March 25, 2009 1:41 PM

BubbaRight:

Exactly.

Posted by: JakeD | March 25, 2009 1:36 PM

Only Obama would get a free pass from the media for a remark like that. The real story is that he wants that money so the Government can dole it out on their worthless entitlement programs.

Posted by: BubbaRight | March 25, 2009 1:28 PM

Only someone as arrogant as Obama would say $4 BILLION per year less for charity is not a "significant impact". No wonder he thinks $2 BILLION per year is acceptable cost to run the White House and fly him all over the place.

Posted by: JakeD | March 25, 2009 1:11 PM

Excuse me, I meant to say "deduction for wealthy givers," not "exception."

Posted by: nodebris | March 25, 2009 12:44 PM

I would guess that charitable giving is already down because of the economy. Obama doesn't care, though, because he knows that Republican causes would be hurt more.

Posted by: JakeD | March 25, 2009 12:43 PM

I tend to agree with Obama's observation that the state of the economy has a far more significant impact on charitable giving than the precise rate of the deduction.

For instance, compared to the 1% or 2% drop that this story cites, ABC news recently reported:

"The Association of Fundraising Professionals (AFP) reported a 10 to 20 percent drop in charitable donations. Some studies put the figure higher at 30 percent since the start of the economic recession last year."

If a slight decrease in the exception for wealthy givers allows us to better balance our budget and revive the economy, it sounds like the gain to charities will far outweigh the loss.

As an aside, have you noticed that many commentators refer to this as a new "tax" on charitable giving, when it is in fact a minor and limited change to the *rate* of the *deduction* for charitable giving, and one affecting only the very wealthy at that?

Posted by: nodebris | March 25, 2009 12:42 PM

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