Obama pisses off the United Way and other charities with proposed charitable deduction cut

Patrick Howley Political Reporter
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Leaders of the charitable coalition the United Way swarmed Capitol Hill Tuesday to lobby against the Obama administration’s proposed cap on the charitable deduction in the federal tax code. Lowering the charitable deduction has long been an Obama policy objective.

United Way US CEO Stacey Stewart and 45 local United Way CEOs hit the Hill to urge “Support for the charitable deduction and expanding incentives for charitable giving in the U.S. tax code,” according to a press release issued on United Way’s behalf. The CEOs were also pushing to strengthen the earned income tax credit and the child tax credit.

United Way’s “Hill Day” was marked by predictable bipartisan photo ops but highlighted an uncomfortable rift between Obama and many economic and health charities and organizations that support most of his agenda.

Obama proposed a cap on charitable deductions in his 2014 budget proposal in April, and it is currently being debated in Congress. The proposal would cap charitable deductions with a 28 percent limit, down from its current 39.6 percent limit on high earners. Obama has tried every year since taking office to set a 28 percent cap.

“The President’s proposal, as you know, includes the provision that would cap deductions for wealthier Americans at 28 percent—a very common-sense proposition,” White House press secretary Jay Carney said of the administration’s proposal, which directly affects those in the top tax bracket but could indirectly affect those in the bottom.

The Democrats’ war on private charity predates the Obama administration, however. California Rep. Xavier Becerra has long pushed for restrictions on tax treatment of charitable giving. The Los Angeles Democrat defines not taking away more money from the most generous Americans as a multi-billion-dollar “subsidy.”

Liberal antipathy toward private giving in favor of increased taxing and spending seems to apply as well at the level of personal behavior. Analyses of tax data have consistently shown both that religious conservatives give higher percentages of their income to charity than secular liberals and that residents of Republican-leaning states are more charitable than residents of Democratic-leaning states. (RELATED: Surprise! Conservatives are more generous than liberals)

The United Way said Obama’s cap would reduce charitable giving and negatively impact poor families who benefit from it.

“The charitable deduction is not about nonprofits, it’s about the children and families whose lives are strengthened through charitable giving. Any limitation to the charitable deduction would reduce giving and communities would bear the consequences,” United Way US CEO Stewart said in a statement Tuesday.

“That’s why United Way leaders are asking elected officials to protect children and families by protecting charitable giving incentives in the tax code,” Stewart said.

A Change.org petition urging Obama and Congress to protect the charitable deduction has gained 677 signatures. The petition was created by the Charitable Giving Coalition, which includes United Way Worldwide, the Salvation Army, Catholic Charities USA, the American Institute for Cancer Research, and others.

The United Way’s Stewart previously opposed Obama’s attempt to cap charitable giving in his fiscal year 2012 budget proposal, writing an open letter to Obama that noted how United Way “strongly supports many elements of your agenda” and “engaged United Way’s deep community-based relationships in every Congressional District nationwide to advocate in support of key areas of alignment between your agenda and our work.”

“However, new limitations on the deductibility of charitable donations are effectively a tax on charities and would lead to a significant reduction in services to the poor,” Stewart wrote. “Conversely, the additional revenue to the government would be insignificant compared to the impact on reducing the deficit. I urge you to refrain from limiting charitable giving incentives contained in the tax code as a source of revenue for deficit reduction, at the expense of the poor who need our help the most right now.”

“I agree–we must protect the charitable deduction,” Republican Sen. John Thune tweeted Tuesday. Thune has been on the forefront of protecting the charitable deduction since Obama’s first attempt to cap it in 2009.

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Patrick Howley