Barack Obama vs. Universities, Food Banks, Churches, the Arts, and Housing

I would welcome the opportunity to participate in any online movement that seeks to bring a broad coalition of interests to bear on Democratic overreach. How does something like this get organized?

This is a massive opportunity for conservatives to kill something Obama is foregrounding in a broad bipartisan alliance. Powerful constituencies on the left could join the opposition. And this is a direct slap at the nation's churches, which direct the a big percentage of charitable aid in this country.

Can you link to where you get your numbers from? It's good to debate on facts.

I was reading how Republicans were saying his budget taxes small businesses, but the numbers don't prove to be true: http://news.yahoo.com/s/ap/20090226/ap_on_go_co/fact_check_budget

Hi,

As someone in the tax bracket that will suffer most from Obama's increase, and as someone on the board of a non-profit, I can assure you that you are not grounded here.  This move by Obama is something that will be very well received. It is viewed as reasonable and fair.  You characterize the White House's defense as a "smarmy insinuation" but it is really a very clever way to look at the math, and it is inarguable.  I get a a greater tax rebate for every $10K I donate to charity than my secretary does.  How is that possibly fair?  Yes, it is a clever new way of framing the issue, but it happens to make sense and will resonate with everyone who gives money to charity and has enough money to care about these things.  

The right needs to focus on measures that will reduce waste and corruption in Obama's spending.  Obama has so out-maneuvered the right on taxes that is a hopeless angle.  Lets face it, he just delivered the largest tax break in history.  And his budget makes permanent his tax breaks for 95% of the country.  And the 5% of the country that will pay more is largely (but not uniformly) sympathetic to Obama's arguments--people remember doing very well in the Clinton years with higher marginal tax rates.  And people with enough money to afford all the personal consumption they wants--cars, houses, TVs, vacations, etc--do care about the quality of state delivered services: I want good schools in my neighborhood. I don't want my town library to shut down. I care veteran's benefits (though I am not a veteran). I don't want the city I am located next to (I am in the suburbs) to decline with greater crime and poverty.  I can't but any more flat screen TVs or a larger house--just don't need it.  I do want some of those societal goods only government can provide, and if I have to pay a few percent more at the margin in taxes it is worth it (I spent more than I needed (but not more than I could afford) to buy something approximating a "dream house" why would I not spend what it takes (in taxes) to get the societal goods I also care about.)

I think the biggest opportunity for the right is that one literally can not spend these massive sums without waste and corruption.  If the right can help constrain that, it has a great angle for relevance. 

Please forgive me for not reviewing your years of entries, but I am curious as to your thoughts on the Social Security tax?  That only affects the first $102k of wages.  To be fair, then, this should extend to all wages/earnings.  Maybe, rather than limiting charitable deductions to 28% (vs 35% for the top earners) we should just make FICA effective on all earnings.

"...a basic fairness principle in our tax code: that no matter who you are, we don't count a dollar of income for taxable purposes once deductions for things like charitable donations and mortgage interest are taken into account..."

1.  The charitable deduction has been subject to an Adjusted Gross Income floor for years.  In other words, the first few hundred or few thousand (depending on your AGI) that you give away as charity is not deductible at all, it is only contributions in excess of that floor that get deducted.  Same thing for Medical Expenses.

2.  I have never understood why mortgage interest is tax deductible, but education loan or auto loan or any other kind of loan interest is not.

I applaud our President and his team for thinking outside the box, and finding ways to make our tax code a little more progressive after years of pressure in the other direction.

I was very pleased to see the steps taking this week to remove the smoke and mirrors from the budgetary accounting system. That was a tough and brave - and, most importantly, CORRECT - decision on the part of the Obama administration. Regarding this current move, where you "smell overreach", I see a man willing to spend a little political capital to get a problem solved. Newsflash - the previous administration cut taxes for 8 years and drove the economy into a ditch.

Moreover, this attacks Obama's base. Michael Barone noted to me today that universities can't be happy about this. Add to that list churches, the arts, the environmental groups, and organizations that serve the poor. This is a transfer of wealth not from the rich to the poor -- because the rich already given the money away, in many cases to groups that serve the poor -- but from the best kind of charitable aid to the worst kind -- government.

This is just another variation on the supply-side, trickle down economics that got us into this mess and which no one believes any more. That kind of thinking produced this recession - and what do you think is going to have more impact on those institution - the recession, or this rule change?

 Pissing off people from both the right *and* the left?  Asking his own supporters to make sacrifices... Seems fair to me!

Anyway.  The key you seem to be missing (just like all the other GOP talking heads) is that for couples earning less than 250k (and individuals under $200k), there will be no tax increase (shades of "read my lips... no new taxes"?)  So the vast fraction of home-buyers will be unaffected.  As for the rich making charitable donations - previous commenters have written better responses.  I'd just add that if you believe exit polling, half this tax bracket voted for Obama, so they should have known what they were getting into, and so would not support this crusade to save the rich ;-)

This has nothing to do with raising taxes and everything to do with liberals thinking government reliance is a good thing.

Obama's budget:

• Attempts to destroy religious, charitable and educational institutions that provide competiting services to the government by cutting them off from their funding   
• Creates competition to private health care by creating government-run health insurance for everyone

 ...could be bad in itself!  I was thinking of this earlier - how people end up buying bigger homes than they could afford.  Here's a good read in... the WSJ!

"But many economists have long argued that the deduction doesn't actually have a significant impact on home ownership, and instead mainly subsidizes the cost of buying a home for the richest Americans, who would buy homes even without it. Some have blamed the mortgage-interest deduction, in part, for spurring borrowers to take out larger mortgages in order to maximize their subsidy.

"One of the costs of the deduction has become painfully obvious to the extent that we have encouraged borrowers to bet so heavily on housing. That now looks foolish," said Edward L. Glaeser, a Harvard economist."

Recall that the new tax rules only impact thost making $250K or more.  Here is a link to a PDF of a 2006 poll by Bank of America into charitable giving by high net worth individuals.

Figure 21 on page 21: How would you change your charitable giving if you received ZERO income tax deductions for your donations?

• Stay the same - 51.7%
• Somewhat decrease - 38.1%
• Dramatically decrease - 7%

That's right, folks - if the deduction went to ZERO only 7% would have a snit.

The proposed change is no where near that drastic - it reduces the deduction from the current 33% or 35% to 28%.

So, Patrick, I'd say nice try, but you are going to have to find something else to fix your outrage to - this is a tempest in a teapot.