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Obama To Charities: Bite The Hand That Feeds You, Or Else! – OpEd

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Does President Obama hate private charity, or does he think only the government should take care of people? Does he just hate the idea of anyone directing their own money as they choose, or what?

For whatever reason, for now the fifth time in his administration, he’s proposing eliminating or limiting the tax deductibility of charitable contributions.

This time around he’s using some interesting tactics, and charities caught in the cross-fire might do well to learn from church leaders who helped push Obamacare to their congregations what happens to amateurs who play politics with the big boys. (Hint: they may find themselves badly burned in the process.)

United States
United States

In the current campaign to get more tax revenue from “the rich,” the White House called in the heads of various charities for a little gentle arm-twisting:

Senior Obama administration officials invited nonprofit leaders to the White House this week to enlist them to push for increased taxes on the wealthy…

“The president has been very clear on this: They are looking to increase rates on the wealthiest 2 percent,” said Stacey Stewart, president of United Way USA, who attended the White House meeting. “They were asking us to lend our voice to that.”

And how did the White House go about trying to persuade these non-profit leaders to “lend their voice”?

The White House officials said that the charitable deduction is more likely to be altered if the president does not succeed in raising tax rates on the wealthy, according to Ms. Stewart.

Charity leaders had been very busy on Capitol Hill, urging lawmakers to reject any limitation or elimination of the charitable deduction. The not-so-subtle ploy by the White House to have them add support for taxing the rich more puts them in a delicate position: if their wealthy donors find out they’re also lobbying to raise upper-income tax rates, will they respond by redirecting their giving to causes that didn’t get into bed with the White House? But if the private charities don’t help Obama pass higher tax rates, will he retaliate by yanking or limiting the deductibility of contributions?

A tricky calculus, indeed.

And a rare peek at some of the most distasteful gamesmanship imaginable.

For this is not a political game where all that matters is if the President “wins” or not. It is a game that involves people’s lives.

Anyone who is familiar with the non-profit sector knows that ever-increasing amounts of federal aid directed to the poor has not decreased poverty, but has, rather, vastly increased the need for more and more private charity.

Even as the number of American families receiving federal assistance ballooned over the past 4 years, demand for services by agencies such as The Salvation Army increased, for example, by up to 80% for programs serving families with children. My local Salvation Army is serving double the number of children as last Christmas.

And what’s the projected impact of the president’s proposed change in the charitable deduction?

Changes in the charitable deduction are conservatively projected to reduce contributions from individuals by 2.5 percent. With individuals contributing $217.79 billion in 2011, that’s a drop of $5,444,750,000, an amount that would run the federal government for 8 hours, but covers nearly two years of budget for the Salvation Army, serving 30 million people annually in need due to poverty, addiction, natural disasters, and just plain bad luck.

And for the Keynesians in the audience, here’s a real multiplier: for every person employed in the non-profit sector, another 5 people volunteer. You won’t get that when you divert those dollars to your friends in DC. (“Hello, IRS, I’d like to volunteer for a day!”)

But if numbers leave you cold, just think about who you’d like turning up on your doorstep in the aftermath of a hurricane: FEMA, or the Salvation Army?

Unfortunately, when only the feds are around to help, it turns out they’re often nowhere to be found.

Let’s not cut off the lifeline that actually serves those most in need. Surely Washington can learn to live with a little less pork.



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Mary L. G. Theroux

Mary L. G. Theroux

Mary L. G. Theroux is Senior Vice President of The Independent Institute. Having received her A.B. in economics from Stanford University, Ms. Theroux is Managing Director of Lightning Ventures, L.P., a San Francisco Bay Area investment firm, and Vice President of the C.S. Lewis Society of California.

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