Many New York residents make charitable giving a part of their estate plan. Whether for estate tax benefits to pass on values and ethics to family members and many other reasons, residents commonly set aside certain assets to go to causes about which they are passionate.
However, according to a new report from a conservative “think tank” if any changes are made to federal rules about charitable tax deductions, then one can expect total giving in the country to decrease by billions each year. Before delving into the details it is critical to point out that the group releasing the study, the American Enterprise Institute (AEI), is known as a long-time opponent of all changes which would increase tax revenues. In addition, this AEI estimate is far higher than that found in similar studies by other groups.
The Charitable Giving Report
According to an article from Philanthropy.com discussing the new estimates, AEI researchers found that a limit to the value of charitable deductions–proposed by President Obama–may cause donors to give up to $9 billion less to charities each and every year. That large reduction in giving would have serious effects, the authors claim, on many non-profit organizations that rely exclusively on the gifts of donors for their yearly operations.
If the President’s proposal passes, it is claimed that overall donations would fall by about 4.4 percent. The researchers used that figure against total giving nationwide to come up with the $9.4 billion amount that may be lost with changes to the tax law. The AEI report argues that the largest donors in particular would likely cut back on giving with the changes, because it is the “top 1 percent” of earners who are most likely to itemize their deductions and benefit from the charitable giving tax break.
All of this is being used to push back against the President’s proposal to curb deductions that certain high earning individuals can take on these donations. Right now the upper limit is at 39.6 percent and the proposal calls for its shift down to a 28 percent limit. For his part, the President and his supporters argue that current law is unfair in that it provides more benefit to high earners to donate than it does to lower income donor. In addition, the additional revenue raised by the tax changes would be used to bolster programs supported by most non-profit organizations.
For help understanding how charitable giving can be incorporated into your estate plan, seek out the help of an experienced attorney today.