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The audacity of giving

Christie Pesavento | Tuesday, March 24, 2009

Before Obama-as-Commencement-speaker debate fatigue sets in for Observer readers, I would like to offer some more fuel for the fire as we continue the “dialogue” that Fr. Jenkins hopes we have as a result of Obama’s acceptance of the invitation.

While most of the critique thus far has focused on how the president’s radical stances on abortion and stem cell research contradict the views of the Catholic Church, another issue that is worthy of our attention deals with the University’s mission to encourage charitable giving and community service.

The Obama administration released its fiscal year 2010 budget proposal on Feb. 27, which contained $3.6 trillion in federal spending and prompted estimates by the independent Congressional Budget Office of deficits averaging $1 trillion over the next decade.

How does Obama expect to pay for all of this? Besides the inevitable necessity of passing the bill onto future generations (i.e. us), one of the shocking methods that would be implemented by the budget is a reduction in the tax benefit from itemized deductions, including charitable contributions, for the top two income brackets, from 35 percent and 33 percent to 28 percent. Or, in laymen’s terms, the budget plan would limit the amount of tax deductions that wealthier taxpayers could receive for donating money to charity. Obama hopes to do this while simultaneously allowing the Bush tax cuts for these same people to expire.

Considering the fact that high-income Americans account for a heavily disproportionate share of charitable donations relative to their numbers (44 percent of charitable contributions as recorded through IRS tax forms came from only nine percent of the population, and less than two percent of taxpayers are responsible for 28 percent, or $81 billion, of all giving), the combination of these policies in the midst of our current financial crisis will undoubtedly have an adverse effect on the amount of money charities receive from these taxpayers.

Setting aside the hopelessly idealistic argument that people should donate to charity out of magnanimity rather than the desire to pay less in taxes, numerous academic studies have demonstrated that tax-deductions do provide a noticeable incentive for giving among the more affluent population. A study conducted by the Center on Philanthropy shows 47 percent of wealthier households say they would give less if these tax deductions were removed. Furthermore, total itemized contributions from the highest income households would have dropped 4.8 percent – or $3.87 billion – in 2006 if the policy suggested had been in place, according to the Center on Philanthropy at Indiana University.

Peter Orszag, White House budget chief, defends the reduction in his blog by pointing out that the extra tax revenue generated from these policies will fund Obama’s plans for universal health care. Taking money from private charities and using it to pay for what amounts to government-run charity? In English, we call this ‘welfare.’

What I find most disturbing about these policy proposals is how they help foster a culture that discourages the notion that people should help one another by insisting that the government will take care of the poor. Removing the personal aspect of giving hurts not only the donors by inhibiting them from carrying out their role as followers of Christ, but generates a sense of entitlement among those in need that discourages them from seeking a way out of their desperate situation. This stands against the mission of the University, which was named for the Church’s model of faith and charity, the Virgin Mary. In its own mission statement, the University claims it “seeks to cultivate in its students … a disciplined sensibility to the poverty, injustice and oppression that burden the lives of so many. The aim is to create a sense of human solidarity and concern for the common good that will bear fruit as learning becomes service to justice.” The selection of Barack Obama as Commencement speaker, however, casts serious doubt on its devotion to this statement.

Christie Pesavento is thanking God she is not graduating this year. She also thanks her friend Chris Geissler for

contributing the title to this column.

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The views expressed in this column are those of the author and not necessarily those of The Observer.