Given the fact that both at state and federal governmental levels, there exists a serious deficit problem, it is no wonder that many proposals and legislation are being introduced to try to stem the tide of financial woes. For the 4th time, President Obama is proposing a change on the charitable tax deduction for households with income greater than $200,000 or net worth greater than $1 million. This is part of the President's formal recommendations to the supercommittee charged with developing a deficit reduction plan by November 23rd.
According to the Council on Foundations:
"The administration has proposed disallowing any charitable deduction to the extent such a deduction reduces the income tax liability of the donor by more than 28% of the donation. Individuals subject to the highest tax rates - currently 33 percent and 35 percent, and scheduled to increase to 36 percent and 39.6 percent in 2011 - would see the tax benefit of their charitable deductions reduced significantly."
This is a big issue for the philanthropic community! I believe that this proposal could be the beginning of a slippery slope; merely the start of undoing the charitable tax deduction which has been in existence for more than 100 years. I am wary that if the charitable tax deduction is reduced once, it will continue to be whittled away over time. Even if a small portion of donors take advantage of itemizing their charitable donations, we don't need a reason to take away giving particularly at this moment in time! We need to encourage people to give! I will write more on this issue - this could have the impact of billions of dollars to the philanthropic sector across the country.