January 4, 2013
Fiscal Cliff Tax Bill Will Reduce Charitable Donations
The Occupy Wall Street, what's-yours-is-mine-sentiment is alive and well, at least judging by the furious reaction to a recent message I sent out on Twitter concerning the tax increase that President Barack Obama just signed into law.
Anticipating that Congress's fiscal-cliff deal might limit charitable deductions, I shifted some of my planned giving from 2013 to 2012. When Congress did pass a phaseout of itemized deductions this week, I tweeted: "I increased donations to charity in 2012. This deal limits my deductions so I, & many others, will likely donate less in 2013." ...
The fact is that when the government reaches into someone's wallet, there is less money left in the wallet to spend or donate as its owner sees fit. When the government raises tax rates and limits deductions, there are consequences—and in this case the government is making the job of private charity even harder. ...
It happens almost every time: Congress tries to target "the rich" but everyone else suffers. That is what I'm afraid will happen thanks to the anti-charity effect of this new law.
If Congress and the president were able to enact real, meaningful tax reform that lowered rates and reduced or eliminated charitable and other deductions, it would be good for the economy and I would support it. And, like countless millions, I would continue to give to charity because it is the right thing to do.
But raising rates and eliminating deductions is the opposite of what we need to make the economy grow and encourage charitable giving. Particularly in a low-growth economy, the new law will likely hurt charities and force more people to rely on the government for assistance—meaning that the government will want to collect even more money as charities suffer.Giving and caring run deep in the American character and help unify a much divided nation. But when the government goes too far in taking, it ends up with more people to give to and care for, because the private sector and charities have less.
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The thing that you have to love about the Wall Street Journal's opinion pages is that a few short weeks ago they had a diatribe on the opposite side, that charitable giving was not affected by taxes and that people who support more charitable giving should not focus on getting more of a charitable deduction. http://dismalpoliticaleconomist.blogspot.com/2012/12/todays-laugh-reading-wall-street.html
That's the great thing about Conservatives in the WSJ. They can argue both sides of an issue and be on the losing side both times.
Posted by: David R. | Jan 4, 2013 9:18:26 PM
So one WSJ article says that when the tax rate on the rich is going down, they have more after-tax income, feel more charitable and give more. The other article says that when rates are rising and deductions for charity are disallowed under the restoration of the Pease rules, the rich have less after-tax income, are less charitable and give less.
The way I see it, the WSJ was right in both articles.
Posted by: DLN | Jan 7, 2013 5:50:44 PM