Commentary Magazine


Re: Obama Takes Aim

The released Obama budget contains many new taxes, including the proposed hike in 2011 of individual tax rates as the Bush tax cuts expire. Just last week at the State of the Union, Obama was bragging that he hadn’t raised taxes on anyone. Well, that’s changing fast. There is the $122 billion in higher taxes from “international tax enforcement and reform.” And the president is proposing to repeal several tax preferences for fossil fuels, raising taxes by $39 billion over 10 years. He also proposes to reinstate Superfund taxes ($20 billion), tax carried interest as ordinary income ($24 billion), modify the cellulosic biofuel producer credit ($24 billion), and repeal last-in-first-out accounting ($59 billion).

But, as John points out, perhaps most shocking is the administration’s revival of an idea panned last year: limiting charitable deductions for upper-income earners. The Orthodox Union, for one, objects, releasing a statement that reads in part:

The President proposes that taxpayers earning more than $250,000 will have their ability to deduct contributions to charities reduced from a rate of 35% to a rate of 28%. (Thus, for example, a person making a $10,000 contribution to a charity would, under the Obama proposal, receive a tax deduction of $2800, as opposed to $3500.) The Administration claims that the current tax deductibility is a disparity that this budget will remedy.

Nathan Diament, director of public policy for the Orthodox Union, issued the following statement:

The Orthodox Union, like so many in America’s nonprofit sector, is gravely concerned over President Obama’s budget proposal to reduce the rate of deductibility for charitable contributions. Even in good economic times, a proposal such as the one put forth in the President’s budget would adversely affect America’s charities. In these distressed times, in which charities are serving more people’s needs while at the same time already suffering a dramatic downturn in donations, the proposal to reduce the rate of tax deductibility for contributions is a recipe for disastrous displacements and cuts in much-needed non-profit sector institutions and services.

It is hard to imagine this proposal will fare any better than it did last year, when it faced a firestorm of bipartisan opposition. It is a measure of just how impervious the administration is to public opinion and political realities that it would seek to recycle an idea this bad. And this once again suggests that the Obami will no longer be in the driver’s seat on legislation. Really, what lawmaker is going to vote to take a bite out of charities when the unemployment rate is in double digits?