A deal to avoid the "fiscal cliff" may have been reached, but the debate over how the resolution will affect charitable giving rages on.
Legislation passed by the Senate late Tuesday night will limit the amount wealthy people can claim for charitable deductions on their taxes. While some say donors shouldn’t be motivated by the amount of money they can write off, others –- including some nervous nonprofits –- argue that tax breaks for charitable giving should have been left untouched in the deal.
One such dissenter is Ari Fleischer, a former White House press secretary under President George W. Bush. Fleischer tweeted his distaste for the deduction decision on Tuesday:
I increased donations to charity in 2012. This deal limits my deductions so I, & many others, will likely donate less in 2013.
— Ari Fleischer (@AriFleischer) January 1, 2013
The cap Fleischer identified will apply only to individuals making $250,000 or more and married couples making $300,000 or more, according to CNN. It could save the government some $50 billion in tax breaks, according to The New York Times.
Fleisher’s threat to suspend giving is just what the charity sector feared leading up to the fiscal cliff deal. In an unprecedented move, nonprofit leaders convened in Washington last month to lobby Congress to leave those deductions alone.
"The President is sending mixed messages to the charitable community," Sue Santa, senior vice president of the Philanthropy Roundtable, said at the time. "On one hand, he wants to limit the charitable deduction. On the other, he wants millionaires to continue to give to charity while also paying higher taxes."
According to Philanthropy News Digest, the new cap on tax deductions could potentially deter giving by anywhere from 0.4 percent to 2.3 percent –- up to $7 billion a year.