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Capping Charitable Deductions to Pay for Health Care Is a Bad Idea

The Senate should abandon the idea of a cap on charitable deductions as a way to fund health care reform, or for any other purpose. A cap would reduce charitable giving and undermine our ability to help ensure that individuals and families have access to food, utilities and housing, and that they can get a job or an education during these challenging economic times.[IMGCAP(1)] We agree that there is a need for health care reform, but creating a disincentive for charitable giving is not the way to fund reform, and we oppose this idea.America has long been defined by an endearing and powerful characteristic — its charitable spirit. Alexis de Tocqueville, the 19th-century French philosopher, described America as unique among nations for its care and compassion — part of the very fabric of our society.This core belief is embodied in our federal tax laws: Basically, if you give some of your income to charity, the government doesn’t tax that income. No matter how much you earn, you are not taxed on income that you donate to those in need. Debate about how much some individuals get to deduct is misleading. Your deduction is simply equal to your tax rate. People in higher tax brackets get correspondingly higher deductions. This is fair for everyone who gives to charity. When tax rates increase, the deduction rate should increase at the same rate. In the past, we and other charities did not object to decreased deduction rates because they were part of corresponding tax rate decreases.Any cap on charitable deductions means some people will be taxed on income they are contributing to advance the common good. Disconnecting the charitable deduction from the tax rate is a step toward abandoning who we are as a nation — one that lifts up and supports those in need. More importantly, as a result of a cap, some people will give less, and those who most need the help will be hurt.For those at the bottom of the economic spectrum — up to 52 million people served each year by United Way-funded programs — all that really matters is charitable services they rely on would be reduced.Health care reform is necessary, and we do not envy the challenge Congress faces in finding sources of revenue; but those individuals and families most in need should not unfairly carry the burden.Brian A. Gallagher is president and chief executive officer of United Way Worldwide.

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