Charitable coalition urges Obama, Romney to leave deduction alone

A coalition of charitable groups is urging both President Obama and Mitt Romney to back off their proposals to roll back the current tax deduction for charitable giving.

The Charitable Giving Coalition, which includes United Way Worldwide and both Christian and Jewish groups, argues that the charitable deduction deserves protection because it encourages contributions to programs that help millions of people in the United States. 

“It rewards a selfless act, and it encourages taxpayers to give more funds to charities than they would otherwise have given,” the coalition wrote in separate letters to Obama and Romney, the president’s GOP challenger.

“Data suggests that for every dollar a donor gets in tax relief for his or her donation, the public typically receives three dollars of benefit. No other tax provision generates that kind of public impact.”

The letters are the latest example of the charitable sector closing ranks around the deduction. They underscore the difficulties of overhauling a tax code that is littered with some very popular tax breaks.

Charitable groups have also said they will be on high alert to protect the deduction no matter who wins the White House early next month, given that both Democrats and Republicans are pushing for tax reform and to reduce the deficit.

Obama has proposed capping all itemized deductions at 28 percent — down from the current 35 percent — for most of his presidency, saying it was unfair that wealthier taxpayers get to write off a higher percentage of their contributions than others.

Romney, meanwhile, has suggested capping the amount of itemized deductions taxpayers can claim, floating figures from $17,000 to $25,000 to $50,000. 

Both those proposals would make progressive changes to the tax code, though some analysts have cast doubt on whether Romney’s idea would cover his plan to cut all individual income tax rates by 20 percent.

But in their letters, the charitable groups noted that taxpayers with an adjusted gross income of six figure or higher were behind 58 percent of charitable giving in 2008.

The groups also said that lawmakers had passed incentives to make charitable giving easier during recent natural disasters, and they made the case that the charitable deduction was more vulnerable than tax breaks like the mortgage interest deduction and the tax break for state and local taxes.

For instance, the groups quoted Martin Sullivan of Tax Analysts saying that it would be easier for taxpayers to limit their donations than to move out of a certain state or locality or to a smaller house. 

Washington officials are expected to start negotiations on big-ticket tax and spending issues after November’s elections, and both sides have expressed interest in hammering out a broad deficit-reduction package.

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