The Wall Street Journal reports on Obama’s tax increase rather innocuously.
The tax increases would raise an estimated $318 billion over 10 years by reducing the value of such longstanding deductions as mortgage interest and charitable contributions for people in the highest tax brackets. Households paying income taxes at the 33% and 35% rates can currently claim deductions at those rates. Under the Obama proposal, they could deduct only 28% of the value of those payments.
The implications, however, are far reaching.
Arthur Brooks, now the President of AEI, wrote a book called Who Really Cares: The Surprising Truth About Compassionate Conservatism. In the book, Brooks notes that conservatives give more to charity than liberals. George Will, in a column last year about Brooks’ book, wrote
- Although liberal families’ incomes average 6 percent higher than those of conservative families, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household ($1,600 per year vs. $1,227).
- Conservatives also donate more time and give more blood.
- Residents of the states that voted for John Kerry in 2004 gave smaller percentages of their incomes to charity than did residents of states that voted for George Bush.
- Bush carried 24 of the 25 states where charitable giving was above average.
- In the 10 reddest states, in which Bush got more than 60 percent majorities, the average percentage of personal income donated to charity was 3.5. Residents of the bluest states, which gave Bush less than 40 percent, donated just 1.9 percent.
- People who reject the idea that “government has a responsibility to reduce income inequality” give an average of four times more than people who accept that proposition.
Liberal activists groups by and large depend on unions. Unions get wages forcibly taken from most workers and do not depend on charitable contributions. On the other hand, churches, faith based out reach groups, and think tanks — the bulk of all three tend to be conservative — depend on charitable giving.
Historically, as taxes have increased, charitable giving has decreased. By raising taxes on the $250,000.00 and over crowd, a segment of the population between $250K and $1 million that is filled with small business owners innovating us out of recession, Obama will significantly impact conservative organizations in a way that won’t affect most liberal advocacy groups.