Plan to Limit Charitable Deductions for the Wealthy

Currently, wealthy donors may write off thirty-five cents of every $1.00 they spend on charitable giving, housing, medical expenses, and other deductible items. However, President Obama recently released details of his proposed $447-billion jobs bill which suggest limiting itemized deduction write-offs to twenty-eight percent.

Obama’s plan would apply to married couples and individuals with an adjusted gross income of at least $25,000 and $200,000, respectively. Over ten years, the plan would provide an estimated $400-billion for the federal government.

The plan has faced strong opposition from nonprofit leaders who believe the plan will cause wealthy donors to second guess giving to charities. In response to these worries, a senior fellow at the Center of Budget and Policy Priorities said:

Charitable organizations need to look at both sides of the ledger. Getting out of the recession would be a big benefit for charitable organizations of every sort. If the economy 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.

SeeLisa Chiu, Obama’s Job Bill Includes Plan to Limit Charitable Deductions for the Wealthy, The Chronicle of Philanthropy, Sep. 12, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.