Tax breaks where needed
So, if you were President Obama working up your first proposed budget, what would you do about a tax break for the wealthy?
Sounds like a no-brainer, doesn’t it? Why should people making more than $250,000 a year — in many cases, lots more — rate a tax break? Roll them back.
But wait. It turns out some altruistic people oppose that move.
The philanthropic community is coming out in favor of leaving alone the tax breaks imposed for upper income Americans, which was imposed during the Bush years. Among those NPOs are Jewish organizations, fearful that their charitable contributions will take a big hit at a time when they need the money most.
JTA reports that the United Jewish Communities, the Jewish Council for Public Affairs, the Orthodox Union and the American Jewish Committee, are all opposing a provision in the budget that the Obama administration says would be used to help create a $634 billion reserve fund to pay for health care reforms.
Set to take effect in 2011, this provision would reduce the charitable tax deduction for households earning $250,000 in gross income annually. Under the current system, those in the 35 percent tax bracket receive a 35 percent deduction on charitable contributions. Obama’s proposal would reduce that deduction to 28 percent.
Not a good idea, some Jewish leaders are saying.
“It is my job to say this is the wrong place to get it (the money for health care) because you are hurting those you are attempting to help — average folks in need of the services of charities,” William Daroff, UJC’s vice president for public policy and the director of its Washington office, told JTA. “Beyond that there are over 15 million people who work for nonprofits, and any decrease in contributions will exacerbate the tough times that many charities are already going through. In fact, many charities, and many federations, are already laying off people.”
AJC Executive Director David Harris echoed that sentiment, warning that the provision could cause a 20 percent decrease in giving by those making $250,000 and up.
They have a point. Unfortunately, it’s the wrong point.
Their argument appears to be that if the rich must pay more in taxes, then they’re more likely to cut their charitable giving this year than they are to put off buying a new car or take a vacation to Palm Beach. We don’t accept that notion, just as we reject the stereotype that the rich are only interested in their creature comforts without concern for those less well off. In our own community, many people who fall into that high-end tax bracket, started life in the Hill District or from some other modest means. They remember where they came from and what it was like. And they give
We especially believe that the AJC’s Harris’ dire warning of a 20 percent falloff in contributions from those who can most afford it is way overstated.
So if there is a drop off in charitable contributions, where is it most likely to come from?
That’s right, from you — the senior citizen on a fixed income; the parents with a combined income of $50,000 to $100,000 a year and 2.5 kids to support, the grown children with an elderly parent or two in assisted living, or the neighbor whose job has just been
You’re more likely to scale back on your charitable giving than someone making $250,000 a year. In your cases, the Obama budget plan does call for tax cuts. They’re just going where they’re needed most.
We understand the concerns of NPOs, Jewish and otherwise. Their job is to raise the most money possible to support their very necessary missions. But in this economy every entity, including the charitable groups, must sacrifice. And tax breaks must be balanced between those who need them most and those who can most afford to pay. We believe that’s exactly what the Obama administration is doing.