President Obama’s budget for FY 2014 is to be released tomorrow. Until it is, only speculation about its content is possible. But it is almost certain that the President will again propose some kind of reduction in the value of the tax deduction for charitable contributions. In every budget up to now, the President has advocated, for wealthy taxpayers, capping the value of itemized deductions at 28%. There is no reason to think he won’t propose the same limit again. In past years, Congress has ignored the President’s proposal, but in the pressured effort to deal with the huge federal deficits and national debt, sympathy for some kind of limit is growing on Capitol Hill.

Cutting back the incentive to give is not a good way to deal with the deficit. As a new website sponsored by the Charitable Giving Coalition points out, “Unlike other tax incentives, the charitable deduction is a unique provision that encourages individuals to give away a portion of their income without getting anything back.” The taxpayer gets a tax break-and the charity and those its serves, and our society in general, get a big boost. As the new website points out:

• In 2011, Americans gave nearly $300 billion to support charitable causes, much of which is claimed as a charitable tax deduction. Individual contributions to charitable causes account for 73 percent of all charitable giving in America
• For every $1 a donor can deduct, the public receives approximately $3 of benefit. No other tax provision generates that kind of positive public impact
• The charitable deduction is used by people of varying income levels. The percent of people indicating they use the charitable deduction is the same for households with incomes between $50,000-$100,000; $100,000-$150,000; and $150,000+.
• If Congress takes away the deduction, we put at risk billions in private donations that have supported diverse, worthy causes. For example, if the Administration’s proposed 28 percent cap on the charitable deduction is imposed, the sector could lose up to $5.6 billion per year.[7] That is the equivalent of more than the annual operating budgets of Red Cross, Goodwill, the YMCA, Habitat for Humanity, the Boys and Girls Clubs, Catholic Charities and the American Cancer Society combined.

To track what happens with the charity tax deduction, monitor:

The Alliance for Charitable Reform

The Charitable Giving Coalition

For the background and significance of the charitable contribution tax deduction, attend or watch on-line the April 16 event sponsored by the Bradley Center for Philanthropy & Cultural Renewal at the Hudson Institute, “The Charitable Deduction in American Political Thought.” Noon to 1:30 pm EDT. Go here for details and a link for the live streamed video.