Obama’s Tax Plan Could Cause Giving by the Wealthy to Drop by Several Billion Dollars Annually

President Obama’s tax proposals — including a limit on charitable giving deductions that could be taken by America’s wealthiest people — could cause giving by America’s wealthy to drop by several billion dollars a year, according to estimates released today by the Indiana University Center on Philanthropy.

The center looked at how the proposals Mr. Obama released on Thursday would have affected giving based on 2006 data showing how much taxpayers deducted for charitable contributions. It said that if Mr. Obama’s tax plan had been in effect, Americans with incomes of $250,000 or more would have decreased their giving by 4.6 percent or nearly $3.9-billion. People at that income level claimed more than $81-billion in charitable gifts in 2006.

The drop in giving is less stark when looked at in the context of how it would affect all Americans who itemize on their tax forms and claim charitable deductions. Total giving by people who itemize would have dropped just 2.1 percent if the Obama plan had been in effect in 2006, the center estimated. Itemized charitable contributions totaled nearly $187-billion that year.

But the center cautioned that giving is far more likely to be affected by the condition of the stock market than by President Obama’s tax proposals. It noted that every time the stock market declines by 100 points, giving declines by $1.85-billion. Charitable donations rise by that same amount when the stock market increases. …