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March 27, 2013 at 08:49 AM
The Senate’s federal budget plan seeks to limit the amount by which affluent taxpayers can reduce their tax bills by itemizing deductions, including charitable donations. But such a plan is unlikely to go far in the House.
A report by The Chronicle of Philanthropy noted that President Barack Obama has called for bringing the tax savings on itemized deductions for wealthy taxpayers to 28% from its current 39.6%, and is likely to do so in his 2014 budget, which is expected to be released the week of April 8, according to Bloomberg. The limit would apply to individuals with more than $200,000 in adusted gross income or couples making more than $250,000.
The Senate plan does not specifically endorse the 28% level, according to the report.
A House Ways and Means Committee panel is examining how nonprofits could be affected by an overhaul of the tax code, something that hasn’t happened since 1986.
Rep. David Reichert (R-WA), who chairs the panel, told The Chronicle that he had never supported capping the charitable tax deduction at 28%. Doing so, he said, would have a negative effect on giving. It would be a way of raising taxes to pay for government spending.
He added that none of his Republican colleagues would support “any sort of cap” on charitable giving.
The Chronicle did the arithmetic on the 28% plan vs. the current 39.6% rate: A $1,000 donation would cost the taxpayer $720 after a $280 deduction, compared with $604 following a $396 deduction — a 19% increase.
