Backlash to the proposed Obama spending spree budget proposal is building in surprising quarters. Or maybe not-so-surprising quarters if you have been paying attention. Very well heeled, left-leaning foundations and charities are becoming very upset at being targeted.
Among those shocked by President Obama’s 2010 budget, the most surprising are the true-blue liberals who run most of America’s nonprofits, universities and charities. How dare he limit tax deductions for charitable giving! They’re afraid they’ll get fewer donations, but they should be more concerned that Mr. Obama’s policies will shove them aside in favor of the New Charity State.
What did these nonprofit liberals expect, anyway? Mr. Obama is proposing a vast expansion of the entitlement state, and he has to find some way to pay for it. So logically enough, one of his ideas for funding public welfare is to reduce the tax benefit for private charity. His budget proposes to raise the top personal income tax rate to 39.6% in 2011 from 35%, and the 33% rate to 36% while reducing the tax benefit from itemized deductions for the top two brackets to 28% from 35% and 33%, respectively. The White House estimates the deduction reduction will yield $318 billion in revenue over 10 years.
From the Ivy League to the United Jewish Appeal, petitions and manifestos are in the works. The Independent Sector, otherwise eager to praise the Obama budget, worries the tax change “could be a disincentive to some donors.” According to the Center on Philanthropy at Indiana University, total itemized contributions from the highest income households would have dropped 4.8% — or $3.87 billion — in 2006 if the Obama policy had been in place. That year, Americans gave $186.6 billion to charity, more than 40% from those in the highest tax bracket. A back of the envelope calculation by the Tax Policy Center, a left-of-center think tank, estimates the Obama plan will reduce annual giving by 2%, or some $9 billion.
Should this proposal pass, it, along with the taking away of mortgage interest deductions for the “rich”, will do a lot worse damage to the non-profits. Charities will see an astonishing drop in contributions. They may never regain the ground lost. Many of those who now contribute may figure that they already “gave at the office” after Obama gets done picking their pockets. Look for more and more people looking to shelter income rather than get fleeced.
And a lot of these charities got “Maddoffed” rather severely also. Tough times ahead for the recipients of the beneficiaries of these charities.
Goldberg points out in “Libeal Fascism” that one of the first things the Nazis did on attaining power was to gut private charities and make the state the prime charitable provider, in order to create dependency. NO one is accusing the Obama administration of Nazism, of course, but the tools of statists of all stripes are remarkably similar.
BTW, Straight8, you’re right about the harm Madoff did to charities. I lost a couple of freelance writing jobs with local LA charities because their patrons had lost scads of money to Bernie and suddenly had little to give to the charities. Some are having to put off projects meant to help their clients, thanks to that creep.
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The world would be much better off if most of these “charities” went bankrupt.