Critics charge that President Obama’s plan to limit the value of itemized deductions to 28 percent would hurt charities at the time they most need financial support. Their argument: Since the maximum value of the deduction for donations to charity would fall from 39.6 percent to just 28 percent , the affluent will give less. Republican Whip, Eric Cantor, asked, “Is there any better time to have charities in full throttle than when you have tough economic times?”
How much would the proposal affect donations? A back-of-the envelope estimate suggests that the Obama plan would reduce annual giving by about two percent, or roughly $9 billion. Here’s how we got there.