Monday, April 6, 2009

Approved budget resolutions neglect Obama's charitable value limits

We are pleased to announce the new federal budget passed two weeks ago, maintained the existing level of tax benefits to all Americans donating to charity and tax-exempt organizations.

The Senate resolution passed shortly after midnight, April 3 by a 55-43 vote. The House resolution was adopted April 2 by a final vote of 233-196 without Republican support.

These 2010 budget resolutions set the spending and tax priorities for the year and did not contain references to the Obama proposal to limit the value of charitable and other itemized deductions for upper-income taxpayers. The two blueprints are now headed to conference where their differences will be worked out before a final draft is submitted to both chambers for consideration.

Neither Budget Committee draft explicitly identifies limiting the value of deductions for charitable contributions, mortgage interest or state taxes (itemized deductions) as a means of paying for health care reforms as President Obama has proposed in his budget outline. The resolutions do create a deficit-neutral reserve fund for health care, but leave it to the relevant committees to determine how to pay for the reforms.

Two amendments were added during the Senate debate that demonstrate concerns over the Obama proposal. One amendment offered by Sen. Robert Bennett (R-UT) provided that health care reform legislation "would not result in diminishing a taxpayers' ability to deduct charitable contributions as an offset to pay" for it. Another by Sen. John Thune (R-SD) would set up a point of order against any measure that would raise revenue from a reduction in the tax deduction for charitable donations. It is possible that these amendments may be dropped in conference.

The passing of these budget resolutions is a victory for all charity and tax-exempt organizations across the country as they are dependant on the contributions from the American taxpayer, the most generous in the world. In 2007, charitable giving in the United States was estimated to be $306.39 billion, exceeding $300 billion for the first time in history, according to Giving USA 2008, the yearbook on philanthropy.

References: ECFA and Giving USA Foundation

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