Obama's Charity Tax Hike

Obama's budget proposes a reduction in the the tax deduction for charitable giving. Why's the president's budget hitting Americans for donating to charity?

Yesterday, President Obama again proposed that the contribution deduction for charitable giving be limited to 28%. The president continues to not understand or chooses not to understand the simple mathematics of his proposal. After one makes a contribution, the money is gone and if the contributor does not get a full deduction, the taxpayer must come out of pocket to pay taxes on the money that has already been given away.

Today, if a wealthy individual earns $2,000,000 and chooses to give away to charity $800,000, he has $1,200,000 of his income remaining and is taxed on that remaining $1,200,000. Under the President’s plan, the wealthy individual would continue to be taxed on the $1,200,000 and at the President’s proposed 39.6% top rate, the wealthy taxpayer would be forced to pay an additional income tax of $92,800 as the result of his/her charitable contribution.

The result of the president’s proposal would be less charitable giving. Is this the goal?

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