Nov 07, 2008, 06:55AM

Lowering the cost of giving money away

With Obama's propsed tax cut, donations to charities and like-minded institutions will receive a bigger deduction.

Here's hoping:

With Mr. Obama and Congress facing a recession and grappling with establishing a new strategy for the war in Iraq, those changes aren’t likely to come quickly. Nonetheless, they could be significant.

One of the key pieces of Mr. Obama’s tax platform during the campaign — a pledge to roll back some of the tax cuts extended by the Bush administration to those earning more than $250,000 annually — would probably increase charitable giving among wealthy donors by 4 percent to 8 percent according to Roberton Williams, principal research associate at the Urban Institute and the Brookings Institution’s Tax Policy Center in Washington.

Here’s why: A gift of $100,000 effectively costs $70,000 at a 30-percent tax rate, and $60,000 at a 40-percent tax rate.

“It would make it cheaper for them to give money to charities and, therefore, if all things are the same, they will give more money away,” Mr. Williams says. “You’re essentially lowering the cost to “taxpayers of giving money away.”


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