White House: Charitable Deduction Cap Won't Hurt Charities

Though President Obama's proposed deduction cap will allow the rich to still write off more than the middle class, charities say it could cost them billions.

Obama’s proposed 2013 budget adhered closely to the Buffett rule -- no one earning more than $1 million should pay less as a share of their income in taxes than middle class families -- except when it came to charity. If passed, those making more than $250,000 per year would deduct their charitable contributions at a rate of 28 percent, rather than the current rate of 35 percent.

Members of the middle class get a 15-cent reduction for every dollar donated.

While the White House assured nonprofits in a blog post Thursday that "80 percent of overall contributions wouldn't be affected at all" because they're donated by people who aren't in the top two tax brackets or come from organizations to which the cap doesn't apply, many charities disagree.

"The president is sending mixed messages to the charitable community," Sue Santa, senior vice president of the Philanthropy Roundtable, said in a release. "On one hand, he wants to limit the charitable deduction. On the other, he wants millionaires to continue to give to charity while also paying higher taxes."

According to a statement released by the Orthodox Union, the deduction cap could reduce donations to American charities by an estimated $4 billion annually.

"The tax deductibility of charitable contributions is, apart from a person's generosity of spirit, the most powerful tool America's charities possess to raise funds that enable them to serve their brothers and sisters," the OU stated. "Even in good economic times, a proposal such as the one put forth in the President's budget would adversely affect America's charities."