NASHVILLE, Tenn. (BP)–President Obama’s proposal to reduce the tax deductions that wealthy Americans can claim for their charitable donations should not affect Southern Baptist churches, according to Warren Peek, president of the Southern Baptist Foundation.
“People give for three reasons. They give out of guilt, obligation and as a cheerful giver,” Peek told Baptist Press. “As Christians, we’re supposed to be that cheerful giver and give from our hearts. If that’s the case in our churches, then I don’t see the giving to churches going down.”
Under Obama’s budget proposal, the tax deduction for those with incomes over $250,000 would be reduced from 35 cents for each dollar donated to 28 cents, returning the rate to where it was during the Reagan administration. The revenue generated from the reduction would help fund the health-care overhaul the president has promised. The proposal was stricken from the Senate’s version of the budget but could be re-inserted during Senate-House negotiations.
Some conservatives, including commentator Dick Morris, have noted that the 1 or 2 percent of Americans who would be affected by the reduction are the same people who give almost half of all donations to charity.
“Churches will be hit most hard,” Morris wrote in a column. “They account for the largest share of charitable donations, but universities, disease research, hospitals, soup kitchens and cultural institutions will also be hit hard. So will international relief efforts that funnel aid abroad through churches or directly.
“It is totally dishonest for Obama to pretend that his curtailment of these deductions won’t hurt the poor,” Morris wrote. “It will most directly impact them since most of the charities Obama is hurting focus on helping the impoverished.”
Obama has said there is little evidence to support the fear that the reduction would have a significant impact on charitable giving, but the Center for Philanthropy at Indiana University has calculated that the highest-income households would decrease their giving by an estimated $3.87 billion.
“The impact of this plan is to starve churches and other nonprofits that actually help the poor and replace them with ineffective (and liberal) government programs,” Tony Perkins, president of the Family Research Council, wrote in a Washington Update e-mail April 2. “It’s an idea so fundamentally un-American that each of us should be raising our voices in opposition.”
In addition to funding health care, Obama said the reduction would help equalize the tax break for those donating to charity.
“When I give $100, I’d get the same amount of deduction as when some — a bus driver who’s making $50,000 a year or $40,000 a year — give that same $100,” the president said of his proposal.
Peek said churches that rely on the support of tithing believers should not fear the proposed policy because such people understand the principle of stewardship that God owns everything and they are simply giving back a portion — typically 10 percent — of the money they’ve been given.
“When it comes to actual gifts and donations, I think people are still going to support causes that they believe in,” Peek said.
Obama’s tax proposal could actually help promote estate planning, which Peek said could mean more church people will turn to the Southern Baptist Foundation and state Baptist foundations to help them leave more money to Baptist causes when they die.
“When someone passes away, their money goes into three buckets. It goes into a family bucket, it goes into a charity bucket and then there’s a large bucket called the government that the money goes into,” Peek said, referring to the estate tax.
“With the tax plan that Obama is instituting, more money is going to go into that government bucket,” he said. “The way to avoid that is to do planned giving for your estate. What would happen is more money would go to charity, more money would go to your family, and less money would go to the government. For the wealthy, it means they’re going to have to do more estate planning so they can leave more money to charities.”
Peek also said Obama’s proposal to reduce the tax break for wealthy Americans probably won’t impact Southern Baptist seminaries and colleges as much as the economic downturn.
Most of those institutions have endowments that help fund their operations, he said, and because investment returns have been negative since last fall, the schools have had to cut programs and staff.
“I think the economy has affected giving more than this tax break. Most colleges and universities and seminaries and churches, especially the larger ones, might get one gift a year for over $100,000,” Peek said.
Obama’s tax proposal, though, surely will affect charitable giving from those who don’t subscribe to the principle of tithing and simply want a tax break, Peek said.
“I do think it will affect those people, but I’m hoping in our Baptist churches that the principles of stewardship are being taught and that most people give because they want to freely give and they understand that God owns it all,” Peek said.
Erin Roach is a staff writer for Baptist Press. For more information about the Southern Baptist Foundation, visit www.sbfdn.org.