Friday, November 30, 2012 - Special Edition

This edition of the ACR newsletter is devoted entirely to upcoming efforts to protect the charitable deduction. The full newsletter is available below or online.
 

ACR Blog Roundup

Featured on our blog this week is a new video with Steve Taylor from the United Way and Evan Liddiard, a tax expert and former senior Capitol Hill staffer.  Steve and Evan discuss why the charitable deduction is different and why it is so important to those who need charity most right now.

Washington Roundup

President Hits the Trail

President Obama rallied supporters on Wednesday, November 28th to sell his plan to preserve current tax rates for the middle class and raise them for the wealthy. This came on the heels of a meeting he hosted with corporate CEO’s.  That CEO group urged the President to avoid going over the “fiscal cliff” (when automatic tax increases cuts and spending cuts go into effect on January 1, 2013 if Congress does not act).  Afterwards, Goldman Sachs CEO Lloyd Blankfein surprised some by saying that he could support tax increases on the wealthy.  He said “In the long run, there has to be more revenue.  The burden of that revenue will be disproportionately taken up by wealthier people. That’s just logical.”

Talks Ramp Up

As we prepare to go to Capitol Hill next week with more than 250 of our Charitable Giving Coalition partners, the lay of the land on the fiscal cliff and tax talks is rapidly shifting. This week, Treasury Secretary Tim Geithner took details of President Obama’s opening proposal to avert the fiscal cliff to Capitol Hill.  The plan called for $1.6 trillion (over 10 years) in new taxes, $50 billion in new stimulus spending, and a new provision that would relieve Congress from having to raise the debt ceiling on a periodic basis.  This plan is very familiar to the President’s FY2013 budget and, as such, Republicans roundly rejected it because of a lack of concession on where to set tax rates on top earners and not enough compromise on entitlement reform.  And while Secretary Geithner was directed to be the emissary during this round of negotiations, it is important to note that any final deal will be privately negotiated between the leaders of each party: President Obama and House Speaker John Boehner (R-OH). For further explanation of the fiscal cliff, visit Bloomberg’s ongoing explanatory series available here.

Taxes not the Only Component

Any current progress could be easily derailed over the next few weeks.  Tax increases and spending cuts are just a part of the year-end financial decisions that are under consideration.  As you may recall from last August and the dramatic year’s end deal that resulted in the upcoming sequestration cuts, the nation’s borrowing limit must be raised early next year to avoid default.  Earlier this month, President Obama raised the debt ceiling issue with Speaker Boehner, to which Boehner responded “There is a price for everything.”  While neither side wants to add another complication to the current policy battles, Boehner views the debt ceiling as one of the few bargaining chips he holds for deficit reduction and tax negotiations. 

Corker Framework

Finally, individual members continue to issue their own plans for deficit reduction. Most recently, Senator Bob Corker (R-TN) released his proposal. In it he calls for $4.5 trillion in deficit reduction over 10 years through spending cuts, entitlement reform, and capping all itemized deductions at $50,000. To date, the Senator has not offered any specifics on income levels for this cap or any details on potential carve-outs. ACR will work with any members of Congress to learn more about their proposals and educate them on how charity might be impacted, and we will keep you up-to-date.

Consider This

Update on Fiscal Cliff Negotiations

Contrary to rosy reports you might be reading in the press, negotiations to avoid going off the fiscal cliff at year’s end aren’t really going all that well.  In fact, leaders in the House and the Senate have actually been throwing additional issues into the mix…

What we can say is there has been a lot of chatter over the last few weeks – on the political talk shows, on Capitol Hill and elsewhere – about the possibility of capping itemized deductions, including the charitable deduction... (keep reading)

Making Headlines

Charitable Deduction

As Congressional leaders and the President engage in fiscal cliff and deficit negotiations, proposals from both sides of the aisle include limits to the deductions for some taxpayers, including the charitable deduction. Efforts of the Charitable Giving Coalition are gaining attention on Capitol Hill. Following are select recent articles on the state-of-play and efforts by the Coalition:

• 11/30/12 Nonprofits Step Up Pressure to Keep Charitable Deduction Intact, Chronicle of Philanthropy
• 11/29/12 Charities Fight to Keep Tax Break on Donations, Wall Street Journal
• 11/29/12 Americans Agree: Charitable Tax Deduction Vital to Nonprofits, Communities, and Donors, Sacramento Bee
• 11/26/12 Tax Them Not Us, Groups Say, AP
• 11/25/12 Nonprofits Fear the ‘Fiscal Cliff’, Crain’s Detroit Business
• 11/25/12 At Edge of Fiscal Cliff, Everyone Fights to Protect His Bit of Budget, Kansas City Star
• 11/22/12 Charles Krauthammer on the Importance of the Charitable Deduction, Fox News
• 11/19/12 Why Obama Pushes Higher Rates vs. Deduction Limit, Wall Street Journal
• 11/19/12 In Fiscal Cliff Talks, Higher Taxes Vs. Closing Loopholes, npr
• 11/18/12 Uneven Bite of Limiting Deductions, Wall Street Journal
• 11/18/12 Fiscal Cliff Negotiators are Facing High Hurdles, Huffington Post
• 11/17/12 Non-profits Brace for Possible Changes that Could Decrease Giving, The Arizona Republic
• 11/17/12 A Political Chill for Charities?, The Christian Science Monitor
   

Here are opinion pieces on preserving the charitable deduction:

• 11/27/12 It's 'Giving Tuesday' but the Future of Charity in America is in Danger, Fox News
• 11/26/12 Don’t Eliminate the Charitable Tax Deduction, US News
• 11/25/12 The Choice: Raise The Tax Rates Or Cap Deductions For Wealthy -Why We Should Care Even If The Result Is The Same, Forbes
• 11/24/12 Charitable Deduction is Indispensable but Shouldn’t be Sole Motivation for Giving, Washington Post

Visit our Charitable Deduction Central for news, opinion, background and updates on the Charitable Giving Coalition’s efforts to protect the charitable deduction.
 

Polling data: A recent poll conducted by the United Way Worldwide reveals strong public support for maintaining the charitable deduction. 79% of Americans believe reducing or eliminating the charitable tax deduction would have a negative impact on charities and the people they serve and two out of every three Americans are opposed to reducing or eliminating the charitable tax deduction.

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