A Greenville News editorial this morning unveils a dastardly attack by the Communist-Mixed-Race-Usurper-of-the-Republican throne on charities in his 2010 budget outline. It seems that “President” Obama wants to limit the ability of people who make over $250,000 a year by letting top tax rates return to the confiscatory levels of the late 1990’s. Many people (especially those who listen to Rush Limbaugh) believe that the 1990’s were the worst period in economic history since the end of the Holy Roman Empire.
Let’s get our facts straight here: First, the President’s proposal was part of a $3.6 trillion dollar budget outline. The official budget won’t be released for several weeks. In any case, the President’s budget is merely the proposal for how Congress should fund the government. It has no force of law and Congress has the final say. Congress will craft its own budget that it will vote on in a few months.
The President’s outline proposes that itemized deductions for those in the top two tax brackets (currently 33% and 35%) would be reduced by about 20%. Charitable contributions were not singled out (or even expressly mentioned in the provision). Under current law, the charitable deduction is equivalent to the tax rate: If you pay the 35% tax rate, you can deduct 35% of your charitable contributions. The outline proposes capping deductions at 28%. Thus, a contribution of $10,000 from someone in the top tax bracket would result in a $2800 deduction, rather than a $3500 deduction. If someone is subject to alternative minimum tax, then this provision won’t affect them because their deduction is already capped. The two most cited studies indicate that this change would reduce giving by 1.3% to 2.1%.
Is the Greenville News really saying that the only reason people give to charities is that they can take a tax deduction? Are people who make over $250,000 that morally bankrupt? Or is “free market” religion, whose liturgy chants that tax cuts are the solution to every problem, really the moral deviant?