The US Senate Budget Committee has just released its FY 2014 Budget Resolution. On pages 65 and 66, the Democratic-controlled Committee asserts that the wealthy are unfairly benefiting from “tax expenditures.”
The Budget Committee calls on the Senate Finance Committee to reduce the deficit by limiting or reforming “unfair” tax breaks for the wealthy. The Committee specifically mentions itemized deductions with various options listed for limiting them (i.e.: a percentage cap, hard dollar cap, etc.). The charitable deduction is not exempted from these various proposals.
The Obama Administration has previously floated a similar proposal. You can read my analysis of that in my post: “Obama Plan Could Cost Nonprofit Sector $5.6 Billion a Year.” In short, limiting or eliminating the tax deduction for charitable giving is expected to have a significant, negative impact on giving.
Senate Democrats also seek to increase tax revenues by $975 billion over the next 10 years. Increasing the tax burden could be an additional drag on the economy. Slower economic growth would result in slower philanthropic growth thereby further impacting the nonprofit sector.
Budget negotiations are at an early stage. Therefore, it’s difficult to know what the outcome of those negotiations will be.
Now is the time for the nonprofit sector to be vigilant and engaged.
That’s what Michael Rosen says… What do you say?
UPDATE (March 14, 2013): The Charitable Giving Coalition, chaired by the Association of Fundraising Professionals, has sent a letter to Sen. Patty Murray, Chairman of the US Senate Budget Committee, in response to the FY 2014 Budget Resolution. This letter is a must-read for anyone interested in the Federal budget and its impact on philanthropy. Michael Rosen Says… has obtained a copy of the letter which you can download: Charitable Giving Coalition Senate Budget Committee letter 3-14-13.
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