Posted on February 22, 2012

Nonprofits Remain Concerned About White House Tax Proposal

While the White House has attempted to assure nonprofits and donors that its recent proposal to limit the deduction for charitable giving will not be included in its fiscal year 2013 budget, nonprofit groups remain concerned, the Chronicle of Philanthropy reports.

One of those groups, Washington, D.C.-based Independent Sector, has focused its attention on two aspects of the administration's proposed budget: a proposal to limit write-offs for all itemized deductions to 28 percent for individuals earning at least $200,000 a year ($250,000 for families), compared to the 35 percent rate many wealthy people currently receive; and the so-called Buffett Rule, which would require anyone with income of more than $1 million to pay at least 30 percent in taxes.

In an attempt to sell the plan, the White House Office of Social Innovation and Civic Participation recently published a blog post by director Jonathan Greenblatt which stated, among other things, that the charitable deduction "is the only major tax break exempted" from the proposals put forward by the administration. Greenblatt also argued that limiting the charitable deduction to 28 percent for individuals earning at least $200,000 a year would be fairer to individuals who don't itemize their returns and to middle-class families, which tend to deduct a smaller percentage of their income for charitable giving.

In a statement on its Web site, IS stated that it continues to be troubled by the proposal to limit the deduction. "Unlike other deductions, the charitable deduction benefits the communities that charities serve and not the wealthy donor," the organization stated. "The proposed cap would have a significant negative effect on charitable giving."