(Post-publishing note: My wife, Gena, and I join the rest of the nation in mourning with and praying for the families and friends of the 20 children and six adults who lost their lives at Sandy Hook Elementary School in Newtown, Conn. We are so incredibly sorry for your loss, and want you to know it is for you and in honor of the precious souls of your loved ones that we continue to fight for a more peaceful, safe and charitable America).
There are two weeks remaining for Washington to take action before the George W. Bush tax cuts expire and $1.2 trillion in spending cuts are triggered. And President Obama is in his normal duck-n-blame mode: “If Congress fails to act before the end of the year, middle class family’s taxes will skyrocket $2,000.”
What the White House is telling you is how it wants to raise taxes on high-income earners to raise revenue to run Washington. What the White House isn’t telling you is how it’s going to slash charitable tax deductions, which, in turn, will trickle down to cripple charities, the middle-class and even the poor.
Part of Obama’s prescription to raise $600 billion in new revenue is to overhaul the tax code by closing loopholes and capping deductions, including tax deductions for charitable giving. The latter would add $239 billion between 2013 and 2017 to the federal income, according to the White House budget.
Reducing tax-deductions for charitable giving was set in motion the very month Obama took office. Way back in February 2009, then-Director of the Office of Management and Budget Peter Orszag explained exactly how the taxes would be used: “the money raised from the limits on itemized deductions would be used as part of the historic $634 billion reserve fund to fund health care reform.”
So let me get this straight: Reduce the power and wealth of American’s charitable givers and giving (and their charities) and reallocate (redistribute!) their tax-deductible offerings to the government’s socialized health-care “charity”?
Orszag confessed, “Some non-profits have argued that the administration’s plan to limit the amount that high-income families (those with income of more than a quarter million dollars a year) can deduct from their taxes for charitable contributions will hurt these organizations – and do so at a time when these organizations’ resources are stretched because of the recession we inherited.”
Orszag then rebutted the charitable collapse theory by saying, “First, the proposed tax change would not be imposed during a recession. Instead, it would begin in 2011 – at which point we expect the economy to be recovering.”
“2011”? Whoops – missed that mark.
So I guess our economy is recovered enough so charitable deductions won’t adversely affect non-profits or their contributions?
Yet just two weeks ago on Dec. 4, Obama himself conceded: “If you eliminated charitable deductions, that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse.”
To get his way, Obama is overgeneralizing and twisting some Republicans’ opinions to use scare tactics and bully charities into accepting his higher tax plan for the wealthy, saying charities will face total charitable deduction elimination under the Republicans’ budget plans.
The truth is: Despite both major political parties are being lobbied extensively by charitable organizations not to limit these deductions, some Republicans in Washington are in fact caving in to this fiscal strategy and folly. Many Republicans have offered to increase tax revenue by eliminating some deductions and loopholes. But fewer are serious about capping the total that taxpayers could write off for any reason, including charitable gifts, as a way to raise revenue without increasing tax rates, according to the Orlando Sentinel.
(Reducing Washington’s spending and going after tax evaders among the 46 percent who, according to Politifact and the Urban Institute-Brookings Institution Tax Policy Center, paid no federal income tax at all in 2011 would be a far, far greater budget alternative than to penalize American givers and their charities.)
No version of limiting (reducing, capping or abolishing) charitable tax deductions is the way out or remedy for Washington’s fiscal fiasco – its out-of-control spending and its skyrocketing national debt and deficits. As the Alliance for Charitable Reform retorted, “We should not be forced to choose between two bad options. Charities and those who give to charity should not be forced to enter this political wrangling.”
But we all know that duck-n-blame games and smoke-n-mirror terminology are the typical modus operandi for this White House. That is why former Director of OMB Orszag also tried to justify back in 2009, “we are not eliminating the deduction – just reducing it to 28 percent (or $280 on the hypothetical $1,000 contribution) for the 5 percent of families at the very top of the income distribution.”
“Not eliminating … just reducing”?
Sounds so promising, doesn’t it?
Tell me something: Have you ever seen a government overreach that didn’t keep overextending? Or a government action that didn’t morph into a greater power grab? Or a government entitlement that didn’t grow to gross proportions? Or a government “reduction” that didn’t shrivel into a government “elimination”?
This December, wise men need to ask themselves two primary questions: Is Washington’s action to reduce charitable tax deductions going to bleed over, trickle down and hurt charities, the middle class, the poor and even the economy? And, does the White House’s action to reduce the charitable deductions rates have a greater motive?
Next week, I will answer the first question. But let me briefly tackle the second question about motive by simply pointing to the Obama administration’s playbook and its coach, Saul Alinsky, who admonished this narcissistic, dog-eat-dog dogma: “To hell with charity. The only thing you get is what you’re strong enough to get – so you had better organize.”
Are reductions of charitable tax-deductions for upper-end earners not, in the end, just another step in the slippery slope of socialism and its break down of classes, economic barriers and redistribution of wealth for the purpose of gaining a more “equal” society and empowering government?
Let us never forget: In socialism, government welfare is the only real charity. And socialistic leaders are fighting like hell right now to get you to accept that.
Will you let them?
Call the White House today at (202)456-1111 or email it. Then call or write your representatives and tell them all to stop penalizing givers and charities to appease their political whims and wild spending. As founders, chairman and executive chairman, my wife, Gena, and I have a non-profit foundation for kids (KickStartKids.org), which is dependent upon the generous gifts of others, I speak for thousands of charities when I say, “Thank you!”
(Next week in Part 2, I will reveal exactly why scholars and tax experts are saying Obama’s reductions of charitable tax deductions will adversely affect the middle class and the poor, too.)