Peter Orszag, Director of the Office of Management and Budget for President Obama, responded Friday to critics of the administration’s proposal to reduce the amount of charitable contributions that high-income taxpayers can deduct. Many tax analysts, including this writer, argued that such a reduction would deplete much needed resources from charitable organizations and further undercut our civil society.
Not to worry, writes Mr. Orszag. We wouldn’t do this in the midst of a recession, and it’s only fair that high-income and lower-income taxpayers enjoy about the same tax deduction for their contributions.
What a relief! The OMB chief knows enough economics to argue that raising taxes in the midst of a recession is a dumb idea. However, taxpayers now know that their taxes will be rising in 2011 (from this and the end of the Bush tax cuts of 2001 and 2003). Don’t you suppose that they might be taking steps today to avoid tax liabilities in just two years, steps that might include backing away from certain charitable contributions?
It is the other hook in his argument that bothers most, however. To suggest that it is a step toward greater social justice to reduce the tax value of charitable contributions made by high-income taxpayers to that made by middle and low-income taxpayers is like Scrooge giving Cratchet an hour off for Christmas and believing he’s done something nearly divine. What is socially just about starving food banks of desperately needed dollars, of stripping centers that protect battered women of charitable contributions, and of denying low-income urban minorities of the education and job training provided by churches, fraternal societies, and voluntary organizations?
If the answer is that a little injustice to the demographically marginal in our population is a small cost for a reformed health care system for the middle class, we might just have to ask Mr. Orszag to take another look at his budget priorities.