Obama's Plan for Charities

President Obama has said that reducing the tax deduction for those who give to charities will not have an impact on charitable giving. He said to "look at the evidence", because according to him there is very little evidence that his proposal would hurt charitable giving. I'm not sure what evidence he is using so I can't speak to that but I think most people can intuitively sense that if there is less of a deduction for our donations to charity then it will be one less reason to give. So if the deduction was the thing that pushed you to donate then you will probably reconsider.

I found one of President Obama's arguments particularly faulty. He said that it wasn't fair that a person who donates $100 and is in the 28% bracket and a person who donates $100 and is in the 39% bracket get differing benefits. The first person gets about $28 off their taxes, the other gets about $39. According to President Obama that's "not fair". Putting aside the fact that this sounds like playground whining, the second person likely has more disposable income than the first so they may be the one more likely to give money to charity. Particularly if there is an incentive. It seems silly for us as a society to continue whining about incomes not being fair. The fact of the matter is that the person paying 39% is paying about 40% more in taxes than the person paying 28%. ($3,900 - $2,800 = $1,100. $1,100 / $2,800 = 39.2%). If they are paying more, then OF COURSE they get a larger benefit from their tax deductions. Why do we call that unfair? I would say that the fact that "Mr. 39%" having to pay 40% more in taxes is unfair.

The main problem I have with this is that President Obama seems to feel that it is better that the government take the money and distribute it how they see fit rather than the millions of us making that decision. That is a fundamental difference in philosophy. Who is better at making good decisions with YOUR money: you or the government?