During Tuesday night’s press conference, President Obama said of his plan to reduce the income tax deduction for charitable contributions, “If you look at the evidence, there’s very little evidence that this has a significant impact on charitable giving.” Unfortunately, the president is wrong.
My wife, a professional non-profit fundraiser, and I wrote a series of articles two weeks ago about the threat the Obama budget poses to American charities. Even under the most optimistic assumptions of groups close to the administration, the president’s proposed budget will reduce philanthropic giving by billions of dollars.
Our articles sparked an feisty debate, especially among our more liberal friends, who insisted, like the president, that the effect would be minimal. But, interestingly, what would truly be minimal under the plan is the revenue gains to the Treasury: Even the president’s own Office of Management and Budget estimates (see table S-6) that the combined effect of reducing deductions for both charitable contributions and mortgage interest will yield only $7 billion in additional revenue for the federal government in FY11. While billions of dollars are a significant amount for non-profits, $7B is a mere rounding error for the Treasury. So it’s simply baffling that the president would make such a stir, and impose so heavily on the charitable sector, for so little gain. It was argued during the campaign that Obama was a redistributionist, but nobody thought he’d be redistributing money from charities to the government.
With any luck, the president will discard this plan, much as he dropped a similarly ill-conceived scheme to pay for health-care reform on the backs of injured veterans.
– Michael M. Rosen is an attorney and Republican activist in San Diego.