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February 17, 2011
"Americans can be awfully generous: The Giving USA foundation estimates that in 2009, more than $300 billion in charitable contributions were made by corporations, individuals and foundations. The money went to a range of nonprofits working in the environment, education, health care and the arts.
Now, in an effort to reduce the deficit, President Obama hopes to limit the charitable deduction for the top income bracket. That is, wealthy donors who itemize would not be able to deduct as much from their income to owe less in taxes. Charities — which are already hurting from the economic downturn — are worried this will discourage potential donors.
Diana Aviv estimates there are about 1 million charities in the U.S. employing approximately 12 million full-time employees. Aviv is head of Independent Sector, which lobbies on behalf of charities and nonprofits. "Our collective budgets," she says, "add up to about $1 trillion."
Tax breaks make it cheaper for many people to give to these charities, but making it cheaper comes at a cost. Leonard Burman, a professor at Syracuse University, estimates the charitable deduction for 2011 will cost the federal government $49 billion — "Not an insignificant amount of money," he says.
The charity deduction is like a lot of deductions: It provides the biggest breaks to the wealthiest donors. That's partly why Obama is going after it. Obama's proposal would put a cap on the tax rate for itemized deductions at 28 percent for individuals earning more than $200,000 a year and couples earning more than $250,000. "The logic behind it," explains Burman, "is: 'Why should millionaires get a much bigger subsidy on their charitable contributions than people with modest incomes?' "
http://www.npr.org/2011/02/17/...d-for-art-nonprofits
