O.U. backs Feldstein

After President Obama’s defense of the reduction in the charitable tax deduction last night, the Orthodox Union is reiterating its opposition to the proposal — citing Martin Feldstein’s argument that charities would lose billions of dollars. The group also is proposing an alternative to what Obama called the unfairness of wealthy taxpayers getting a larger deduction than other individuals — raise the deduction rate for middle-income taxpayers. Here’s O.U. public policy director Nathan Diament’s statement:

Like so many others in the charitable sector, the Union of Orthodox Jewish Congregations remains gravely concerned by President Obama’s budget proposal that would harm charities and is disappointed that he continues to press for its adoption. We cannot respond to the President’s assertion that the proposal will not depress charitable giving better than the argument laid out today by Professor Martin Feldstein (the noted Harvard economist and a member of President Obama’s Economic Advisory Board) in today’s Washington Post.

As for the President’s contention that the current tax deductability policy is unfair, we suggest that such unfairness can be remedied by not lowering the deduction rate for contributions by higher income donors, but by raising the deduction rate for charitable contributions made by middle income donors to match the rate which applies to higher income contributors. This approach would not only redress the “tax fairness” issue, but also bolster charities through greater giving incentives and bolster middle income Americans by effectively giving them a larger tax break. We hope the President will consider this more constructive approach.

One problem with the O.U. alternative proposal: While it would help charities and address the unfairness argument, it wouldn’t raise any money to pay for health care reform, which is where the Obama admninistration says the dollars raised from the deduction change will be directed.