I asked earlier how the economic crisis is affecting African faculties of theology. Now the New York Times reports:
Administration officials said Mr. Obama would propose to reduce the value of itemized tax deductions for everyone in the top income tax bracket, 35 percent, and many of those in the 33 percent bracket — roughly speaking, starting at $250,000 in annual income for a married couple.
Under existing law, the tax benefit of itemizing deductions rises with a taxpayer’s marginal tax bracket (the bracket that applies to the last dollar of income). For example, $10,000 in itemized deductions reduces tax liability by $3,500 for someone in the 35 percent bracket.
Mr. Obama would allow a saving of only $2,800 — as if the person were in the 28 percent bracket.
I expect that this tax grab will be seriously detrimental to African theological faculties which depend on American donations to make ends meet. Now imagine that for every $10,000 given in charitable donations the donor partner only receives back $2800 at tax time. This will have a spiral effect downward, because in our experence, the tax refund cheque that we receive every year is immediately re-donated. If the refund cheque is smaller giving by donor partners will necessarily go down. This is bad news for theological education in Africa. The net effect is that Obama will be stealing from Africa. I told you not to hold your breath for benefits to Africa from Obama! He is trying to put 7% levy on every dollar given by your important partners.
But already the global crisis is having an effect on African theological education. One president of a seminary in Africa wrote to select partners this week:
We would like to inform you that because of the global crisis, our institution … is going through very difficult time. Since the end of December 2008, we are not able to pay salaries of our staff. We are accumulating bills for electricity, water and other supplies.
We are now going to lay off part of our staff at the end of February. We are also taking several steps to minimize the impact of the financial crisis on our institution.
Obama’s Charitable Problem, by Monte Kuligowski
Obama, Charity, and Fairness, by Gregory V. Helvering