Public Policy
President Obama’s FY 2010 budget outline includes tax changes for those in the highest bracket, including a measure that would reduce the value of tax deductions for charitable donations, state and local taxes and mortgage interest for families earning more than $250,000.
Independent Sector's Position
IS believes that our nation must continue to encourage individuals of substantial means to meet their responsibilities to give back to the community, especially in these difficult economic times. At the same time, the rising cost of providing health care for the more than 12 million employees in our organizations is also compromising our ability to deliver needed services. Independent Sector has released a statement calling on the administration and Congress to preserve charitable giving incentives and to explore all of the available options to pay for a more comprehensive, more effective health care system. Read the IS statement (PDF) on Changes to Tax Incentives for Charitable Giving and Health Care Reform.
Specifically, the Administration’s budget outline released February 26 states:
Reducing Itemized Deduction Rate for Families With Incomes Over $250,000. Lowering health care costs and expanding health insurance coverage will require additional revenue. In the health reform policy discussions that have taken place over the past few years, a wide range of revenue options have been discussed -- and these options are all worthy of serious discussion as the Administration works with the Congress to enact health care reform. The Administration’s Budget includes a proposal to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent -- and the initial reserve fund would be funded in part through this provision. This provision would raise $318 billion* over 10 years.
* On May 11, 2009, the Obama Administration released revised revenue projections that estimate that the itemized deduction proposal would raise $267 billion over 10 years rather than the original estimate of $318 billion.
The $635 billion reserve fund partially paid for by the itemizer adjustment is planned to address much needed health care reform in the United States. Many economic experts believe that restructuring our nation’s health care system is among the most important steps to restoring and maintaining long-term fiscal stability.
Many in the nonprofit sector believe that this provision could provide new challenges for nonprofits in an unstable fundraising climate by serving as a disincentive to some donors who might reduce their gifts on account of the new limit.
Give Us Your Feedback
Independent Sector will continue to engage in this debate as the federal budget process moves forward and will post analyses as they become available. We encourage you to share your thoughts with us, as well as any specific examples of how this change might affect your organization.
Last Updated: May 12, 2009
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