Obama’s Tax Proposal Will Cost Charities Billions, Says Minority Whip

By Josiah Ryan | March 26, 2009 | 8:27 AM EDT

House Republican Whip Rep. Eric Cantor (R-Va.) appears on "Meet the Press" on Sunday, March 15, 2009. (AP Photo/Meet The Press, Brendan Smialowski)

(CNSNews.com) - President Barack Obama’s proposal to reduce the charitable deduction for taxpayers earning more than $250,000 annually will cost non-profit organizations billions of dollars and “defies logic,” House Minority Whip Eric Cantor (R-Va.) told CNSNews.com on Wednesday.
Some Democratic lawmakers who spoke with CNSNews.com said they also oppose using the tax code to discourage charitable giving.
Obama explained his intention to scale back the tax deduction for charitable giving at his prime-time press conference on Tuesday:
“People are still going to be able to make charitable contributions,” he said. “It just means, if you give $100 and you're in this tax bracket, at a certain point, instead of being able write off 36 or 39 percent, you're writing off 28 percent. Now, if it's really a charitable contribution, I'm assuming that that shouldn't be a determining factor as to whether you're given that $100 to the homeless shelter down the street.”
Obama defended his plan as a “good idea” and a “realistic way for us to raise some revenue from people who've benefited enormously over the last several years.”
But Republican leaders disagree:
“It just defies logic as to why we would want to put up a disincentive for people to give to charities, especially when so many people are in a desperate state in our economy,” Cantor told CNSNews.com after a press conference on Wednesday. “We need charities now—we need them operating at full throttle so I am full-force opposed to what he is trying to do and I am hopeful we can defeat that provision.”
Cantor said the plan could cost charities billions of dollars. “That doesn’t make sense,” he said.
Senate Minority Leader Mitch McConnell (R-Ky.) told CNSNews.com that he thinks the proposal is a “bad idea” and that he “hopes it does not become law.”
“These organizations are hurting enough. The administration doesn’t need to hit them up for more tax revenue while they’re down,” McConnell says in a message on his Web site.
Even Democratic lawmakers said they do not believe the federal government should reduce the incentive for wealthy individuals to make charitable donations:
“I would have to look at the total proposal but I am not in favor of reducing the amount,” Rep. Bobby Rush (D-Ill.) told CNSNews.com. “I think that would hurt not-for-profits and those organizations that are struggling on the front lines of real survival for so many American people -- especially those who are disenfranchised.”
“I sit on the Ways and Means Committee and we are going to carefully look at it,” Rep. John Lewis (D-Ga.) told CNSNews.com Wednesday. “I am a big supporter of charitable organizations and groups—especially foundations—and I want to do what I can to encourage people to continue to make deductible-type contributions.
Lewis added, however, that he needs to study the proposal more carefully before making a final decision.
The Association of Fundraising Professionals, a group that works to advance charitable giving, says Obama’s proposal to scale back the charity tax deduction is “unwise.”

The group points to its own survey showing that 2008 was the worst year for charitable fundraising in a decade; “anecdotal evidence” indicates that 2009 may be even worse.
“The president’s unprecedented proposal, which would effectively impose a tax on charitable giving, is unneeded and will further hurt the ability of charities to provide services,” said AFP President and CEO Paulette V. Maehara in a news release.
"It is incorrect to suggest that incentives do not play a role in charitable giving,” Maehara added. “While people decide to give for any number of reasons, incentives are a critical factor in determining how much someone gives, especially as gifts get larger.”

Obama says scaling back the tax deduction for the wealthiest Americans is “not going to cripple them; they'll still be well-to-do. And ultimately, if we're going to tackle the serious problems that we've got, then in some cases those who are more fortunate are going to have to pay a little bit more.”

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