According to a May 27 statement by the Office of Management and Budget, the Obama Administration continues to favor capping the tax deduction for charitable contributions at 28 percent. In his fiscal year 2010 budge, Obama proposed reducing the charitable contributions that could be deducted for taxpayers earning more than $250,000 from a 35 percent rate to a 28 percent rate as a method of paying for national health coverage. The administration prefers this idea over other health-related proposals aimed at funding health care reform, because of the “reluctance to do anything that might undermine the incentives for firms to offer health insurance to their workers,” as stated by OMB’s executive director.
OMB has not made promises about the proposal’s prospects in Congress. Obama has proposed no changes to the employer-provided insurance component of the health care system. The administration and the Center on Budget and Policy Priorities have held that the proposal will not seriously harm charitable giving and will affect only the top 1.2 percent of U.S. households and result in a decline in total charitable contributions of only 1.3 percent. However, the Independent Sector disagrees, thinking that the already injured charitable sector should not be targeted.