Opinions vary on how giving will be affected by the fiscal cliff legislation. The new law raises the top income tax rate from 35 to 39.6 percent and resurrects an old provision that reduces itemized deductions by 3 percent of the amount that married-joint filers’ income exceeds $300,000. Giving may fall because write-offs are limited as a person’s taxable income rises, reducing the value of deductions by up to 80 percent for the highest-income taxpayers, the Tax Policy Center says. But the Urban Institute claims giving will rise by 1.3 percent or $3.3 billion this year because the highest earners will derive larger benefits as a result of higher tax rates. They will save $39.60 in taxes for $100 donated, up from $35.00 under the previous rates.
Every year the Internal Revenue Service fails to collect as much as $1 billion in taxes because it doesn’t do enough to make taxpayers prove the value of gifts of art, real estate, cars, and other non-cash contributions to charities, according to the U.S. Treasury’s inspector general for tax administration. The new report marks the fourth time since 2007 the government watchdog has identified the problem, the Chronicle of Philanthropy reports. The watchdog estimates that upwards of 273,000 taxpayers claimed $3.8 billion in deductions for 2010 without adequate proof of the items’ value.
Rep. Charles Boustany (R-La.), a leading critic of the IRS’s approach to nonprofit issues, has been reappointed chairman of the House Ways and Means subcommittee that focuses on tax-exempt organizations. Boustany expressed concerns last year that the tax collection agency does not monitor charity abuses aggressively enough.
The Robert Wood Johnson Foundation has hired its first Vice President for Public Policy, Peter Murphy, who will “work to educate politicians about the foundation’s research and learn how the fund can help lawmakers shape policy,” according to an interview he gave BeliefNet.com. Murphy’s first nonprofit job was as a community organizer for the American Friends Service Committee in 1969. Later he was a college professor, then a congressional staffer on Medicare. He “says that philanthropy can have a much bigger impact if government adopts and expands projects that foundations initiate.”
After six years, Eric Bruner has resigned as chairman of the American Humane Association’s board. It’s unclear why Bruner quit, but he leaves three months after the media reported the group paid $233,863 to his business partners for unspecified consulting services.
GOLDMAN SACHS WATCH
Goldman Sachs Group Inc. moved up the payment of bonuses so that its top officials could avoid taxes. The bank gave senior executives including CEO Lloyd Blankfein a total of $65 million in restricted stock late on December 31, just hours before new, higher tax rates took effect. Ten of the bank’s directors and executives received early vesting on a half million shares awarded previously as compensation, the Wall Street Journal reports. Such vesting normally happens in January.