Fiscal Cliff: Obama wants more than just taxes on rich folks …

Are we heading for a future where the only non-profits will be those with government blessing and government funding?

A move by the Obama administration to limit tax deductions for charitable donations could lead this country in exactly that direction. The administration has made this part of the package it is bargaining for in the so-called “fiscal cliff” imbroglio.

A December 13 Washington Post article discusses the lobbying efforts concerning the move to cut charitable deductions to non-profits. It says in part:

The White House and the nation’s most prominent charities are embroiled in a tense behind-the-scenes debate over President Obama’s push to scale back the nearly century-old tax deduction on donations that the charities say is crucial for their financial health.

In a series of recent meetings and calls, top White House aides have pressed nonprofit groups to line up behind the president’s plan for reducing the federal deficit and averting the year-end “fiscal cliff,” according to people familiar with the talks.

In part, the White House is seeking to win the support of nonprofit groups for Obama’s central demand that income tax rates rise for upper-end taxpayers. There are early signs that several charities, whose boards often include the wealthy, are willing to endorse this change.

But the White House is also looking to limit the charitable deduction for high-income earners, and that has prompted frustration and resistance, with leaders of major nonprofit organizations, such as the United Way, the American Red Cross and Lutheran Services in America, closing ranks in opposing any change to the deduction.

“It’s all castor oil,” said Diana Aviv, president of Independent Sector, an umbrella group representing many nonprofits. “And the members of the nonprofit sector I represent don’t want any part of it. It’s a medicine we’re not willing to drink.”
(Read more here.)

If the government cuts off deductions for charitable giving, where will that leave the many non-profits out there? Where, especially will it leave those non-profits who have the temerity to oppose the ruling powers in government?

I think it will leave them in a position where they either have to go to the government itself for additional funding, or curtail their activities. This, of course, would mean that those non-profits which please government leaders, particularly politicians, would become powerful and that their relationship with these politicians would tend toward a kind of political/social/financial incest.

Those non-profits with the temerity to oppose these powerful people would see their influence wither and weaken. NGOs have been the voice of conscience in far too many situations around the world for moves to constrict their funding to be a benign act.

That is where I think the administration’s ploy to reduce charitable tax-exemptions by the wealthy is heading. I’ve been hearing behind-the-scenes rumbling about plans to bring non-profits under the government heel for over a year now. This move makes me think that they are more than rumblings.

By linking the idea of reducing deductions for non-profit donations with the very popular idea of having the wealthy pay more of their fair share of the cost of government, the Obama administration has been able to slip this by the public with very little attention.

That’s great news for Planned Parenthood, since Planned Parenthood seems to have the President’s unwavering commitment. The Affordable Health Care Act is a plenteous bounty for Planned Parenthood. The administration has been willing to go to the wall in moves to attack organizations that Planned Parenthood regards as enemies. It’s even gone so far as to take on the First Amendment to attack the Catholic Church.

Based on all that, I’m not inclined to give the administration the benefit of the doubt about this move to limit deductions for charitable donations. I think, given recent history in these matters, that would be almost childishly foolish.


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  • neenergyobserver

    I’m never inclined to give any government of either party any benefit of the doubt, which you already know, so I doubt I’ll offend you. While I see your point and it’s valid, a better solution would be to end ALL deductions and reduce tax rates to bring us to a balanced budget in say 5 years and then reduce them some more-thereby starving the beast.

    In truth, the way it is now gives the government to much control over how we use our money and for what purposes, non-profits are fine, but if they can’t raise money on a level playing field, well too bad.

  • Bill S

    It doesn’t make sense to drop the deduction for charitable contributions. The whole donation goes to the charity. If the deduction is eliminated, there will be less incentive to give resulting in reductions in donations, which will probably be made up in government funding. Only a portion of the donation remains with the taxpayer. That is the only part that the government would gain assuming the level of donations remained unchanged (which is no likely). The rich will just keep their money and neither the government nor the charities will see any of it.

  • Manny

    This man is a disaster. I can’t believe the country supports him. He hasn’t given an inch to the House Republicans. Negotiations is a give and take. He’s looking for a catagorical win rather than a win-win. He’s poisoned the waters and given no reason for the House to engage the negotiations. He’s looking for the fall off the clift.

  • Bill S

    John Boehner has no influence on his own party members. They won’t budge on increasing taxes for the wealthy and they will all pay for it when they come up for election. If we go over the fiscal cliff, it will be due to their obstinancy. People will remember this when they run for re-election.

    Obama is not stupid. He knows how much the republicans will suffer if a deal is not agreed to by the deadline. That’s just smart politics.

    • Rebecca Hamilton

      Bill, you do understand that both sides of this are putting politics ahead of the welfare of the American people, don’t you?

      • Bill S

        Yes. I understand. But I support Obama standing up against the Republicans who will face the wrath of the voters if they don’t give ground on the tax cut extension for the wealthy. Obama is dealing from a position of strenght and I don’t blame him if he doesn’t back down.