President Obama’s recently released budget includes a proposal for a cap on charitable contribution deductions. He says this cap is being proposed to equalize the value of a contribution deduction among taxpayers in different tax brackets.
Will President Obama’s proposals spell disaster for churches and other charities? It’s hard to tell but we certainly know that churches wouldn’t benefit from it.
Here’s an example of the effect of the President’s proposed limit on itemized deductions, if enacted by Congress. A wealthy taxpayer in the 39.6 percent bracket makes a $100,000 contribution to his church. This contribution will result in tax savings of $28,000. Without the President’s limit on itemized deductions, the same contribution would result in tax savings of $39,600. In other words, the same contribution would be $11,500 more costly under the President’s proposal.
You may say “Well who cares if rich people don’t get their tax deductions?” but should a wealthy American be penalized simply because they’ve earned well? Consider Pastor Rick Warren who earns millions a year but gives 90% to his church and lives on the remaining 10%. He would be liable for a huge tax burden that would decrease the amount given to church to pay the tax.
What about average Americans who may give sacrificially? Twice in my life I’ve given away more than 50% of my income to my local church. I would not have been able to pay the taxes on the total amount.
Our tax laws are structured to encourage people to donate to charities. In these tough econmic times Mr. President we don’t need the government to take money out of our churc offering plates. Leave our donation incentives alone!!
Please write your congressman and tell them to not hurt our churches by taking away charitable giving tax incentives.