President's Proposed Cap on the Charitable Deduction Will Hurt Communities

Monday, February 2, 2015

President Obama unveiled his Fiscal Year 2016 Budget today, which sets forth the Administration’s spending and policy priorities for the coming year. This year, the Budget presents a fiscal plan oriented around “Middle Class Economics.”

The President, again this year, calls for a cap on all itemized deductions, including the charitable deduction. The budget also simplifies the private foundation excise tax, as it has in past years.

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Vikki Spruill, the Council’s President and CEO, released a statement on the proposed Budget earlier today:

The Council supports the President’s proposal to simplify the private foundation excise tax to a single flat rate. We have long argued that a single flat rate will simplify the tax laws and will increase charitable activity. We would prefer to see a flat rate of one percent, the rate passed by House of Representatives last July. The Council will continue working with lawmakers and the Administration to ensure that philanthropy’s voice resonates.

Since 2009, President Obama has proposed a 28 percent cap on itemized deductions, including the charitable deduction. This misguided proposal would cost our most vulnerable communities the most, and we would see the loss of billions of dollars in charitable investment. This approach directly impacts the ability of donors to support vital services and removes a crucial incentive to give.

The charitable deduction is a powerful and proven way to strengthen communities, and the Council stands beside the entire nonprofit sector in opposition to any move to limit it. Capping it would have a cascading impact on nonprofits and philanthropic organizations across the country.

Philanthropy has a proven track record of delivering measurable impact for America’s communities. The Council hopes that President Obama and other policymakers advance proposals that help sustain their work, and that requires that they view foundations as partners.

The Council looks forward to working with the Administration and Members of Congress to develop policies that allow philanthropy to continue building a strong, resilient economy and thriving communities.