Would you give as much under reduced charitable deductions?
Despite the fact that charitable deductions are the 10th-most popular tax break (nearly 40 million Americans claim them annually), those in Washington are willing to gamble that you're going to give as generously in the future without it. But is their roll of the dice with your wages a good one?
Here are four reasons that reducing charitable tax deductions in any form would be bad business for America:
1) Reducing charitable deductions would be the wrong solution at the wrong time (bad economy) to fix our country's budgetary problems.
Reducing, capping or eliminating charitable deductions would yield a minuscule amount of revenue compared with the massive increases in the debt, deficits and future expenditures brought on by the Obama administration -- with Obamacare, for example. Even according to the White House, reducing charitable deductions would add only $239 billion between 2013 and 2017 to the federal income.
As Seth Giertz, the University of Nebraska economics professor who co-wrote the Congressional Budget Office's May 2011 analysis of options for the charitable giving deduction, told ABC News, "given the fiscal problems we're looking at, you can't just scale back the charitable deduction. Problems are just too big for that."
2) Reducing charitable deductions would trickle down, tying the hands of the wealthy, crippling charities and hurting the middle class and the poor, who often are managing nonprofits or the benefactors of them.
As Stephen L. Carter, professor of law at Yale University and the author of "The Violence of Peace: America's Wars in the Age of Obama," wrote, "maybe in a perfect world nobody would worry about whether gifts to a particular organization were tax-deductible. In the imperfect world in which we live, however, charities fight to preserve their 501(c)(3) status, and with good reason: The deductibility of contributions affects people's willingness to give."
Carter added: "But the argument once more misunderstands the purpose and function of the deduction. Its principal beneficiaries are not those who give, but those who receive. If I donate money directly to a local soup kitchen rather than requiring it to wade through the layers of paperwork and volumes of regulation required for obtaining even the mere chance of a direct government subsidy, everyone is better off -- especially those who eat there."
3) Charitable tax deductions were granted to motivate Americans to contribute and build up the public good -- something needed now probably more than at any point in America's history.
The charitable tax deduction was first enacted during the War Revenue Act of 1917 -- four years after the income tax was legislated and taxes increased to cover World War I costs -- for the very reason that legislators worried that wealthier Americans would not give to charity after paying their taxes, according to the Tax Policy Center and ABC News.
The thought behind the deduction, as explained by then-Rep. Carl Curtis, R-Neb., was that charitable giving should be "exempt from taxation" for the very reason that it represents "an expenditure for the public good."
4) The additional costs of reducing charitable contributions would be that Americans would have less freedom over their finances and less incentive to give to charities, while the federal government's power would grow exponentially.
As Carter eloquently explained, "Democrats and Republicans alike have come to refer to the charitable deduction's 'cost' to the government. This language, however, only makes sense if one concedes that government has first call on every dollar earned in America. It isn't obvious why this starting point is the correct one. It is just as easy to begin with the proposition that the earner owns the money, in which case it is the removal of the deduction -- or the tax itself -- that is a cost."
That is why I said last week that this president and his administration are taking their cue not from the best interests of the American public but from the playbook of their coach, Saul Alinsky, who encouraged this narcissistic, dog-eat-dog dogma: "To hell with charity. The only thing you get is what you're strong enough to get -- so you had better organize."
In the very midst of the season of giving, the last thing we should be discussing is transforming America and Americans into the scrooges of charity. What would our forefathers say to an America that, instead of pondering ways to help charities in December, discussed ways to penalize them? It's foolish, pointless and preposterous!
Gone are the days when presidents such as Ronald Reagan fought for churches and charities and celebrated the Christian faith in a national broadcast.
If you care about the future of America, call or write the White House today at 202-456-1111 or at Whitehouse.gov, and then call or write your representatives and tell them all to stop penalizing givers and charities to appease their political whims and wild spending. My wife, Gena, and I share a mission with our nonprofit foundation for kids (http://www.KickStartKids.org), which is dependent upon the generous gifts of others. I speak for thousands of charities when I say, "Thank you!"
There is still no greater example and charitable act than the gift that God gave the whole world on Christmas Day: his son. More than 2,000 years ago, the angel proclaimed to the shepherds, "For unto you is born this day in the city of David a Savior, who is Christ the Lord."
Now that's charity worth believing in and modeling!
From Gena and me, have a merry Christmas and a happy new year, and keep fighting for America!