US tax plan a ‘£40m’ hit on charities
PRESIDENT BARACK Obama’s proposal to lower the income tax deduction rate for charitable giving could lead to $60 million (£40m) in annual losses for Jewish charities in the states and could cost Israel $12 million (£8m), the Jewish Federations of North America (JFNA ) has warned.
In his proposed budget for the 2013 fiscal year, the President calls for the charitable deduction rate to be reduced from 35 per cent to 28 per cent for those in the top tax bracket (individuals earning $200,000 or more or families making $250,000 or more).
“The consequences would be immense,” said William Daroff, vice president for public policy and director of the Washington Office of the JFNA. “Studies confirm that particularly high-end donors are very tax-code sensitive… The Jewish Federations raise around $1 billion a year, and 90 per cent of our funds come from the top 10 per cent of charitable donors.”
If the proposed reforms are carried through, the US charitable sector as a whole would face a 4 to 6 per cent annual loss in donations, says Mr Daroff. “For the Jewish Federations, that means a decrease of between $40 and $60 million annually.
“Given that Israel receives substantial amounts of money through the Jewish Federations, any decrease in our income will have a proportionally negative impact on money that flows into Israel.”
With an estimated $200 million (£127 m) transferred annually from the JFNA to Israel, the expected reduction in charitable donations would result in a $8-12 million decrease in funds for Israel.