Phasing out the Charitable Contribution Deduction.

[Fire_Medic_Dave]

Someone brought this up on another thread. Is there any truth to this? I think it's a horrible idea. I'd love to get details if it's true and anyone has them.

David

[rpannier]

1. I hope it's not true

If I find anything I'll post it here

Thanks for the heads up

[donco6]

2. I hope not.

Our education foundation will shrivel up and die.

[lisa58]

3. We are in the process of getting our taxes done...

...the accountant didn't say anything about that - and he would so we would know for next (this) year's filing.

Where did you hear this?

[Fire_Medic_Dave]

13. On another thread on an unrelated subject.

My wife and I run a dog rescue and donations are essential to the survival of many dogs.

David

[Cerridwen]

4. Reduced beginning at a certain income threshold.

I saw it earlier but I don't remember where. If I find the specifics I'll post.

[ThomWV]

5. Either get rid of the deduction or the Office Of Faith Based Initiatives - can't have it all

If we are paying faith based orginizations with tax dollars then there can be no justification for also making it a tax deductable item.

As for the non religious ones, well, sorry about that. Personally I do not think there should be any deductions, just a progressive rate based on all income with a lower limit (poverty rate) at which no tax is due.

[Ms. Toad]

6. The last chatter I heard was that they contemplated

making it available to more people by moving it off of Schedule A.

(There already is an income based phase out, by the way, for folks with higher income - it isn't new.)

[Cerridwen]

7. Here's part of it - it from (sorry) washington times but it matches

the more reliable source I read earlier.


"Still, the charitable giving deduction reduction, which would limit deductions for couples making $250,000 or individuals making $200,000, provoked the most heat Thursday. Mr. Obama is counting on that provision to raise $179.8 billion over 10 years."

[The Velveteen Ocelot]

8. Not true. Just a little less benefit for the very rich.

As I understand it, those whose taxable income is greater than $250K/year could deduct their mortgage interest and charitable deductions only at the 28 percent rate, not at the 35 percent rate (or the 39.6 percent rate, once Bush’s tax cuts expire after next year). Right now, every $1,000 in mortgage interest or charitable gifts generates $350 in tax savings for top earners; under the new plan the tax savings would be $280.

[gratuitous]

10. Good to hear

I'd hate to lose the benefit from giving away one dollar in every five I'm paid, and the beneficiaries of my eleeomosynary activities would be similarly chagrined.

[Cerridwen]

9. Here's an article on who most benefits from those deductions...

If you are in the 25% tax bracket in 2008 and 2009, the actual cost of a $100 donation is only $75 ($100 less the $25 tax savings). As your income tax bracket increases, the real cost of your charitable gift decreases, making contributions more attractive for those in higher brackets.

The actual cost to a person in the lowest bracket, 10%, for a $100 contribution is $90. For a person in the highest bracket, 35%, the actual cost is only $65.

So, maybe you've noticed something: Thanks to the 2001 and 2003 tax cuts, the after-tax cost of a contribution is actually rising as lower tax rates reduce the value of the deduction.Give and Grow Rich

[onenote]

11. there have been limitation on the total amount of deductions by high income taxpayers for years

For the wealthiest taxpayers, there is not a dollar to dollar relationship between the amount of charitable giving and the amount of a deduction. This is because the total amount that can be deducted by a with adjusted gross income of more than a specified amount has been subject to limitations, as follows:

If the taxpayer's adjusted gross income is above the threshold, then the total allowable itemized deduction will be reduced by the lesser of 3% excess of adjusted gross income over $156,400; or
80% of the total itemized deductions.


To illustrate, in 2007, the applicable amount was for a couple filing a joint return was $156,400. A couple with adjusted gross income of $300K and $20K of itemized deductions would first calculate 3% of the amount of their income in excess of $156,400. That amount is $4308. Next step involves calculating 80% of the deductions = $16K. The lesser amount of these two -- $4308 -- is then subtracted from the total deductions, so that the $20K in deductions is reduced to $15,692.



This limitation itself has been subject to a phase out, meaning larger amounts of deductions actually are treated as deductions. One of the Obama changes would, I believe, stop this phase out and keep the deduction limit in place. I'm not sure exactly how the limit on charitable deductions would work, but in addition to the overall cap, individual deductions have long been subject to limits -- for example, medical expenses are only deductible above a certain threshold.

[Mike 03]

12. I desperately hope this is not true. NT