Negotiations are underway in Washington regarding the federal budget and spending. One proposal which has been floated for inclusion is reducing the tax deduction for charitable contributions. Specifically, for those earning over $250,000 (married) or $200,000 (single), the tax benefit of all itemized deductions, including charitable contributions would be capped at 28 percent. Without such a limitation, a $10,000 donation would reduce taxes by almost $4,000 for someone in the top tax bracket. The President’s proposal would limit the tax savings to $2,800, or an increased after-tax cost of almost $1,200, or about 30 percent. The OU believes such a proposal will harm charities throughout our community. When the OU leadership was in Washington a few weeks ago, we raised concerns about this proposal with the White House. Today, we urge you to act to encourage your congressman and senators to not include such a proposal. Below is a draft letter to send to your representatives:
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Dear Senator or Representative (insert name):
I am writing to urge you to protect charitable giving incentives in the Federal tax code, including the current charitable deduction, as Congress considers deficit reduction and the debt ceiling.
The ability of donors to deduct contributions to charity from their taxes is a cornerstone of America’s charitable tradition, and an indispensable source of funding for nonprofit organizations that provide vital and viable alternatives to direct government programs. Tax policy should encourage charitable giving, especially during times of economic recovery. Limitations on charitable giving tax incentives would reduce charitable contributions. As demands on nonprofits continue to increase over the next few years, we must ensure that the tax code continues to promote giving and enables charities to meet the rising demand for critical community-based services.