New Study! Impact of the Obama Administration's Proposed Tax Policy Changes on Itemized Giving

Proposals to Cap Charitable Deduction, Raise Tax Rates Likely to Have Relatively Small Negative Impact on Overall Charitable Giving, Study Finds

 Combined with recession’s effects, slow recovery and potential government funding cuts, changes could negatively affect charities

The Obama Administration’s proposals to reduce the charitable tax deduction for wealthy households and to increase the marginal income tax rates they pay would, by themselves, have a modest negative effect on itemized charitable giving, according to a new study conducted by the Center on Philanthropy at Indiana University and sponsored by Campbell & Company.

The first proposal would reduce the value of itemized charitable deductions from the current 35 percent to 28 percent in 2012 for taxpayers with an adjusted gross income over $250,000 for couples or $200,000 for individuals. The second proposal would raise the marginal income tax rate from 35 percent to 39.6 percent in 2013 for those taxpayers.

The study looks at how itemized charitable giving would have been affected in 2009 and 2010 (using historical tax data) if the proposals had been initiated in those years, respectively.

The complete study can be found by clicking here.

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Sarah Barnes