Will Obama's Plan to Trim Charitable Tax Deductions Hurt Religious Groups?

The Christian Century, April 21, 2009 | Go to article overview

Will Obama's Plan to Trim Charitable Tax Deductions Hurt Religious Groups?


The White House's proposed 2010 federal budget calls for reducing the deduction for charitable contributions for the nation's wealthiest taxpayers. Some religious groups are asking how that will affect their bottom line. The answer: it on depends who you ask.

Here's what it means in real terms for the 5 percent of Americans whose household income exceeds $250,000 a year. Those families can currently save $350 in taxes for every $1,000 donated to charity; under President Obama's plan, that amount would drop to $280 per $1,000 donation.

"By doing this, you raise the cost of giving," said Roberton Williams, a senior fellow at the Tax Policy Center, a liberal Washington think tank.

By Williams's calculations, the change will result in a 10 percent drop in charitable giving by wealthy Americans, who typically contribute about 20 percent of all charitable dollars. In real dollars, Williams projects a decline of about $6 billion in charitable donations because of the change.

But Williams also said religious institutions may be spared because most wealthy Americans funnel their biggest donations to education, the arts and health care. Think campus buildings, art museums and hospital wards with family names attached.

"My guess is that religious groups will not see nearly the drop that other charitable recipients will see," Williams said.

For now, experts say, religious groups are probably on fairly safe ground. Sylvia Ronsvalle, executive vice president of the Illinois-based Empty Tomb research organization, says religious groups often fare better than most in an economic downturn. "There does not seem to be an immediate economic relationship between church giving and the economy," she said. When times get tough, people still give to their houses of worship. …

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