During the Tuesday night press conference, Politico’s Mike Allen and the president had this exchange:
Allen: Are you reconsidering your plan to cut the interest-rate deduction for mortgages and for charities? And do you regret having proposed that in the first place?
President Obama: No, I think it’s — I think it’s the right thing to do.
Where we’ve got to make some difficult choices — here’s what we did with respect to tax policy. What we said was that over the last decade, the average worker, the average family have seen their wages and incomes flat. Even at times where supposedly we were in the middle of an economic boom, as a practical matter their incomes didn’t go up. And so (what/well ?) we said — let’s give them a tax cut. Let’s give them some relief, some help — 95 percent of American families.
Now, for the top 5 percent, they’re the ones who typically saw huge gains in their income. I — I fall in that category. And what we’ve said is, for those folks, let’s not renew the Bush tax cuts. So let’s go back to the rates that existed back in — during the Clinton era, when wealthy people were still wealthy and doing just fine. And let’s look at the level at which people can itemize their deductions.
And what we’ve said is let’s go back to the rate that existed under Ronald Reagan.
People are still going to be able to make charitable contributions. It just means if you give $100 and you’re in this tax bracket, at a certain point, instead of being able to write off 36 (percent) or 39 percent, you’re writing off 28 percent. Now, if it’s really a charitable contribution, I’m assuming that that shouldn’t be the determining factor as to whether you’re giving that hundred dollars to the homeless shelter down the street.
And so this provision would effect about 1 percent of the American people. They would still get deductions. It’s just that they wouldn’t be able to write off 39 percent. In that sense, what it would do is it would equalize. When I give $100, I get the same amount of deduction as when some — a bus driver who’s making $50,000 a year or $40,000 a year gives that same hundred dollars. Right now, he gets 28 percent — he gets to write off 28 percent, I get to write off 39 percent. I don’t think that’s fair.
So I think this was a good idea. I think it is a realistic way for us to raise some revenue from people who benefit ted enormously over the last several years. It’s not going to cripple them.
They’ll still be well-to-do. And, you know, ultimately if we’re going to tackle the serious problems that we’ve got, then in some cases those who are more fortunate are going to have to pay a little bit more.
Allen: It’s not the well-to-do people; it’s the charities. Given what you’ve just said…
President Obama: Yeah.
Allen: …are you confident that charities are wrong when they contend that this would discourage giving?
President Obama: Yes. I am. I mean, if you look at the evidence — there’s very little evidence that this has a significant impact on charitable giving.
I’ll tell you what has a significant impact on charitable giving is a financial crisis and an economy that’s contracting. And so the most important thing that I can do for charitable giving is to fix the economy, to get banks lending again, to get businesses opening their doors again, to get people back to work again. Then I think charities will do just fine.
