Rick Dunham

Democrats love to say that they are the party of compassion, but the words ring hollow when you consider the administration’s tax proposal winding its way through Congress.

President Obama wants to reduce the deduction for charitable giving by individuals making more than $200,000 a year or families making more than $250,000. This could end up further eroding the support of charities at a time when many of them already have been forced to lay off workers.

It would mean that when we desperately need the help of our charities, we would be turning to government, which helped create the economic mess we’re facing, to somehow deliver these services.

This proposal shows a thinly-veiled contempt for so-called “wealthy” Americans. Witness this recent statement by supporter Joel Berg, executive director of the New York City Coalition Against Hunger:

“Combined with other progressive Obama tax proposals, that change would not only start to redress the inequality gap that has engulfed America in recent decades but would also help pay for many effective domestic programs … [and] greatly reduce struggling families' need for charitable aid.’’

That’s incredibly prejudiced and naive.

The idea of an “inequality gap” can only mean that the 2.8 percent of households that earn more than $200,000, according to IRS figures, generate wealth they have not earned.

Certainly there have been scandalous abuses, but those are the exception, not the rule. The vast majority of these households are made up of honest, hardworking Americans, and generous ones too. According to the Center on Philanthropy, they earned 31.3 percent of the country’s income in 2006, but contributed 43.5 percent of all itemized charitable deductions on individual returns.

Embedded in these numbers are the 1.7 million small, privately owned partnerships and S corporations with $200,000 or more in taxable income reported on the owners’ personal returns. Supporters of Obama’s plan don’t understand that it will undermine these businesses, especially when you consider the plan proposes to also raise their tax rate.

And it’s clear that supporters of Obama’s plan don’t respect the entrepreneurial spirit of those who have risked their own money, sweated out cash-flow challenges and built the small businesses that account for 50 percent of our gross domestic product. We have to conclude that the administration looks at these companies as having added to the “inequality gap” by being successful.

Rick Dunham

Rick Dunham is President and CEO of Dunham & Company.