President Barack Obama’s 2014 budget proposal to limit tax deductions for the wealthy has been a hot-button issue for charitable organizations that fear it will lead to a reduction in giving.
As a way to help reduce the federal budget, Obama proposes that itemized deductions be capped at 28 percent for individuals with incomes more than $200,000 and married couples earning more than $250,000. A coalition of charities has been fighting the proposal.
The Chronicle of Philanthropy reported that nonprofit advocates say the proposal to cap the deduction at 28 percent could reduce charitable donations by as much as $9 billion a year.
But two high-profile billionaires say that the urge to give among the very rich is not driven by tax deductions. In an interview this week with CNBC, Berkshire Hathaway CEO Warren Buffett and Microsoft CEO Bill Gates said the proposed cap wouldn’t affect them, but it might deter those with less wealth.
Buffett is well-known for urging the superwealthy to give at least half of their fortunes to charity through the Giving Pledge, founded by himself and Gates. Donating huge sums renders the tax deduction nearly useless, but for those with lesser fortunes, it might be more meaningful, the two acknowledged.
If the tax deduction is limited to 28 percent, Buffett said, “I don’t think it will have a dramatic impact, but maybe a slight negative impact, but not super dramatic.” He added that elimination of the tax deduction would almost certainly negatively impact charitable donations.
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