WASHINGTON, D.C., September 19, 2011 (LifeSiteNews.com) – The nearly half-trillion dollar job creation bill President Obama is pushing Congress to pass is funded mainly by sacrificing tax deductions for America’s biggest charitable donors, a move that has non-profit advocates up in arms.
According to Liberty Counsel, the American Jobs Act would mean taxpayers with adjusted gross incomes over $250,000 for married couples filing jointly (or $200,000 for single taxpayers) may deduct only 28 percent of the value of the charitable contribution, starting in 2013. The limitation would affect itemized deductions and certain other tax expenditures that would otherwise reduce taxable income in the 36 or 39.6 percent tax brackets. A similar limitation also would apply under the alternative minimum tax.
Charity advocates argue the legislation purporting to create jobs in a struggling economy is counterproductive, forcing deprived charities to either lay off workers or cut services, including those intended to serve the poor.
“Nonprofits employ almost 10 percent of the work force nationwide, and in many states nonprofits are the largest employers,” William C. Daroff of the Jewish Federations of North America told the Chronicle of Philanthropy. “In our view, cutting the deduction is like cutting your nose to spite your face.”
This is not the first time Obama has targeted charitable deductions: the president proposed the same increase in budget proposals for 2011 and 2012 and as a way to pay for the federal health care bill in 2009.
According to the Heritage Foundation blog, the tax hike would likely cause “several billion dollars in decreased revenue each year for hospitals, educational institutions, and nonprofits that help the poor.”
In addition, notes Heritage’s Ryan Messmore, Obama’s mantra of having everyone “pay their fair share” – or targeting the wealthy for steeper taxes – deals a very palpable blow to America’s charities.
“These high earners make up only a small percentage of total American households, but they contribute almost half of the donations claimed each year as charitable deductions,” he wrote.
President Obama presented the text of the American Jobs Act last week before travelling to Richmond, Va., Columbus, Ohio, and Raleigh-Durham, N.C. in a “pass it now” tour stumping for the bill. The president on Monday called the bill full “of the kinds of proposals supported by both Republicans and Democrats, and that the Congress should pass right away to get the economy moving now.”
Politico reported last week that many Congressional Democrats are less than supportive of the bill’s fresh bundle of taxing and spending only weeks after lawmakers, who failed to approve enough cost-cutting measures to keep the debt ceiling in place, saw America’s credit rating downgraded for the first time in history.