Debt Ceiling Deal: Charitable Tax Breaks Safe For Now
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Nonprofits nationwide are resting easy after charitable deductions were left untouched in the deficit deal the Senate passed Tuesday.
Charitable organizations were worried that Congress would cap the value of these deductions, deterring donors from making large contributions. But President Obama had long-insisted that limiting this tax loophole was necessary to help reduce the nation's deficit. Ultimately, nonprofits won this round with passage of Tuesday's bill. Donors will get to keep their tax breaks.
But charitable deductions aren't completely safe for the long haul.
The notorious "Super Congress" needs to find an additional $1.5 trillion to cut. Philanthropic deductions could come under fire at that point, according to Philanthropy.com. Jason Lee, a lawyer from the Association of Fundraising Professionals -- which is in favor of maintaing the value of deductions -- tells the site that they know charities aren't in the clear.
"We assume that the new committee will certainly consider the cap on deductions. So we're working under the premise that we still have our work cut out for us."
Obama has said in the past that charitable tax breaks are inherently unfair, CNN reported.
"While I agree with the goals of many of these deductions, like homeownership or charitable giving, we cannot ignore the fact that they provide millionaires an average tax break of $75,000 while doing nothing for the typical middle-class family that doesn't itemize," Mr. Obama said.
Brian Gallagher, HuffPost blogger and president and CEO of United Way Worldwide, says that as the government tightens its belt, it should do more, not less, to help charities ease the burden of providing for the nation's needy. Gallagher writes:
"At a time when unemployment remains high, our nation's most vulnerable families need more help, not less. States can't fill the gap and most are cutting their human services budgets. As a result, more and more people are turning to charities for assistance. Thus, any change to the federal tax code that undermines charitable giving is a bad idea."
Martin Hutchinson at ETF Daily News argues that reforming charitable deductions would reduce the budget by $50 billion and could actually help middle class tax payers who don't typically itemize their deductions.
Includes files by Simon McCormick
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First Posted: 08/03/2011 9:58 am EDT Updated: 10/03/2011 6:12 am EDT