President Obama said last night that he wants to ensure that his efforts to force the richest Americans to pay more taxes do not hurt people who make big donations to charity.
In his State of the Union address, the president said those making more than $1-million should be required to pay at least 30 percent of their income in taxes. But, he said in an accompanying document, “the administration will work to ensure that this rule is implemented in a way that is equitable, including not disadvantaging individuals who make large charitable contributions.”
Donors who itemize their taxes can now write off up to 35 percent of the amount spent on charitable gifts, although Mr. Obama has previously proposed limiting that to 28 percent for individuals with incomes of at least $200,000 ($250,0000 for couples).
In his speech, Mr. Obama also proposed eliminating tax deductions for people with incomes of at least $1-million, saying, “Washington should stop subsidizing millionaires.” But a White House official said that would not apply to the charitable deduction.
The accompanying document, “Blueprint for an America Built to Last,” specifically mentions eliminating tax subsidies for housing, health care, retirement, and child care for the very wealthy.
Mr. Obama's address did not discuss tax breaks affecting wealthy people who make less than $1-million.
The president proposed the 30-percent minimum tax rate as part of a broader effort to make the tax code more equitable, dubbing it the “Buffett Rule” after Warren Buffett, the business tycoon, who has famously complained that he pays a lower share of taxes than his secretary.
President Obama said little about social-service programs in his address, focusing on manufacturing, education, energy, construction, and relief for homeowners.