President Obama’s newly released budget is a bold and massive affair. Is it the best thing for the country? No one can be sure. Is there wasteful spending, about equally divided between Republicans and Democrats? Yes. Did it make a mistake in its approach to charitable giving in America? In my opinion that would have to be a “yes” as well.
Under this budget, Americans making $250,000 or more a year are going to see the deduction value of their charitable donations go down from 35% to 28%. So, for example, a person making a $10,000 contribution to a charity would, under the Obama proposal, receive a tax deduction of $2800, as opposed to $3500. Does that really matter? It sure does!
Just as we are being told that recovery will require an unprecedented partnership between the public and the private sector, the administration devalues individual charity. That is not smart and it is not right. Diretor Orzag and his crew of what my friend Nathan Diament of the OU’s Institute for Public Affairs calls, the “green eye shade folks” (apparently that’s slang for accountants, and since I just learned that, I thought I would share) really messed up on this one.
It’s not that this change will cripple philanthropy. As most studies indicate, it almost certainly will not. But it does equate the value of charitable giving with all other deductible expenses. And at precisely the moment when we need to reaffirm the importance of individuals stepping up to address those in need, this does the opposite.
As president Obama told the nation this week, we must not give in to fear. He is so right about that. So why not do everything in our power to encourage people’s personal generosity at just the time they may feel too afraid to give?