President Obama’s Jobs Plan is Bad News for Charities
www.Heritage.org
President Barack Obama released his plan to reduce the nation’s burgeoning deficit this week, outlining a number of proposals that will increase taxes and do little to reduce government spending. Also included in the president’s deficit plan and American Jobs Act is a concerning proposal that could signal bad news for charities.
President Obama proposes to pay for his $447 billion jobs bill mainly by limiting tax deductions for wealthy Americans. Unfortunately, if enacted, this policy will likely dampen charitable giving and further shift perceived responsibility for social welfare from individual donors to the state.
The President’s plan calls for lowering the rate at which wealthy taxpayers can take itemized deductions—from the current rate of 35 percent down to 28 percent, beginning in 2013. The change would affect individuals making more than $200,000 (and families making more than $250,000) per year.
This isn’t the first time President Obama has suggested this approach. He did so in his proposed 2011 and 2012 federal budgets and in 2009 attempted it as a way to pay for his health care plan.
The result of President Obama’s proposal will likely be several billion dollars in decreased revenue each year for hospitals, educational institutions, and nonprofits that help the poor. While giving would probably drop only a small percentage, the anticipated amount would total more than the combined annual operating budgets of the American Cancer Society, World Vision, St. Jude Children’s Research Hospital, Habitat for Humanity, and the American Heart Association.
Those who are served by these institutions aren’t the only ones who would be hurt by decreased giving. Many people’s jobs would also be threatened.
Perhaps most importantly, Obama’s proposal sends the message that federal bureaucracy can deploy the resources of the wealthy more effectively than civil society can. Decreasing an incentive for charitable giving implies that the state should assume responsibility for people’s needs, even at the expense of vital nonprofit organizations. Churches, ministries, and other community-based institutions, however, are often better equipped to serve people in need. And they often do so at reduced costs.
At a time when charities most need resources to care for the hurting and hire more employees, President Obama should seek ways to encourage voluntary giving and protect nonprofit groups. Instead, his proposed jobs bill moves the dial of social responsibility one more notch in the direction of the state.
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Poverty Rate Remains Flat Despite Government Spending
The official poverty rate in the U.S. has declined minimally since the late 1960s, despite government spending. Many non-profit charities, however, are helping the poor achieve sustained self-sufficiency. Find out how marriage, family, and work can address the root causes of poverty at FamilyFacts.org.
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