Don’t be charitable about jobs bill

Don’t be charitable about jobs bill

The Charleston Gazette | October 5, 2011 | By Craig D. Eyermann

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.

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.

Prior to the new jobs initiative, the president previously had gone after the charitable deduction in his fiscal 2012 budget proposal. That proposal called for limiting the tax deduction for high-income earners by as much as 30 percent.

So let’s recognize reality and do some simple math. Here is the reality: 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. Logically, at least some fraction of the $19.14 billion now going to charity would disappear.

Now for the math: 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.

There are those, including some in the White House, who think government should do everything. But government’s track record is less than exemplary. The president’s attempt to go after the wealthy by going after the tax deduction for charitable contributions will have real human costs.

Consider the case of former Goldman Sachs partner Dinakar Singh, whose daughter was diagnosed in 2001 at 19 months old with Spinal Muscular Atrophy. The condition causes the nerve cells that control the body’s muscles to deteriorate, with severe cases causing death within a few years and less severe cases requiring substantial supportive care over the patient’s lifetime.

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One Response to Don’t be charitable about jobs bill

  1. […] BillTax Deductible Medical ExpensesCharities pay dearly in jobs plan – BostonHerald.comDon’t be charitable about jobs bill var topsy_style = 'big'; var topsy_nick = ''; var topsy_order = 'count,badge,retweet'; var […]

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