President Obama's crusade against the wealthy is not about "fairness" or helping the less fortunate. It is about who gets to control the allocation of wealth, as the President's effort to cut tax deductions for charitable giving shows.
From the start of his presidency, Obama has sought to reduce the percentage of charitable contributions higher-income earners can deduct from their federal income taxes. That effort is being pressed more aggressively now, The Washington Post reported last week. Obama is meeting with officials and board members of many of the nation's biggest charities to get their support for his proposal to cap income tax deductions at the 28 percent rate. If a person in the 35 percent tax bracket makes a charitable donation, he or she would get to deduct 28 percent of it instead of 35 percent, as is now allowed.
The White House says that change would raise $574 billion for the federal government over 10 years. Of course, the change would take that $574 billion from American charities. Obama proposes literally taking money people would otherwise give to charity and redirecting it to Washington for politicians to use.
Obama portrays this change as a way to take money from the rich. But as the people who run charities know, it would really be taken from the people they help, not from the donors. Stacey Stewart, president of the United Way, told the Post that charities have been unable to convince Obama of the folly of pursuing what she called his "assault" on the charitable deduction.
During the presidential campaign, Mitt Romney proposed capping the amount of money the wealthy could take in tax deductions. But unlike Obama, Romney would have lowered tax rates in exchange. Obama would cut the charitable deduction and raise rates on the rich, doubly reducing both the amount of money the wealthy have to donate to charity and their incentive to give. And Romney's plan did not single out the charitable deduction, as Obama does.
In the context of broader tax reform, reducing the charitable deduction has merit. But Obama proposes no other reform. He simply wants to take money from charities so he, not they, can decide how to spend it. He intends to shrink the charitable sector for the purpose of growing the government sector. What a guy.