Will The Wealthy Donate Less Because Of Health Care?

Here is an interesting statistic.  America donates annually more money than any other country (the link also has some other interesting stats).  Our European counterparts are not even close.  This has gotten me thinking about our procession to create more entitlements.  Now that the health care bill has passed, will this cause the wealthy to donate less to charities?  After all, the wealthy are primarily the target of this law to distribute their riches to the poor.  On average, the business they own and the salary they take home will see big tax increases.  More importantly, unearned income will be taxed up 3.8% and will be in addition to the end of the Bush tax cuts.

What kind of effect will all of this have on donating?   Is it logical to look at the tax increases as a forced “charity”?  If health care is the final entitlement to help support the general population, is it logical to assume people will donate less?  If you are going to see 5-10%+ increases in your taxes when you make above $250,000, will you donate less because of it?  Even more specifically, in 2008 people gave $21.6 billion to health related services.  Will this area dry up to nothing? There also have been some discussions to increase the itemized deduction amount and/or cap the deduction for donations.  Forgetting the current economic climate, which obviously has reduced donations, I believe this new law will have a long-term effect on charities.  I also believe it will cause many other ill effects that congress never even imagined would occur.

Readers: What do you think?  Do you think there will be less donations because of more cradle to grave entitlements?  Are you planning on donate less because of the new taxes and entitlement?


  1. Evan says:


    I think you are 100% correct. USUALLY it is those with discretionary income that are donating large sums. If that discretionary income dries up due to taxes – so do the donations

  2. daddy paul says:

    I am sure donations will go down to a point. Are you going to chip in to help with some ones medical bills? I see in town they are having a lamb roast for some woman who fell of her horse. With government health care that will not be needed. I could be wrong. Perhaps we will see donations needed so a 90 year old woman can have a pacemaker.

    • Investor Junkie says:

      Hi daddy paul,

      I'm all for donations myself and we do make donations. Currently not as much as I like and would like once we get to a specific level of net worth for ourselves (I believe you need to ensure your house is in order first before you can help others). The question becomes though if I want to donate 10% of our annual income (that is our ultimate goal) but yet we see an annual increase of 10% in our taxes (which is not completely out there), why would I want to donate? That cash flow is no longer available.

      As a side note, I myself am for HC reform and believe our current system is broken. IMHO this is more of what we current system (not less). At least what I can see this will cost a lot of money, not be deficit neutral, and won't control costs.

  3. kayla says:

    I am pretty pissed to be targeted by this new healthcare reform bill. Yes, I did calculation that my share of tax will for sure go up since our household pulls in more than 300K a year and we have large sum of unearned investment income.
    Will I stop donating? probably not. I see it as two different things… I will still keep supporting my friends who run ironman/half marathon to donate to the Leukemia society because I think it's a good cause and my friends put in effort in training to raise money for the good cause. It shouldn't be stopped by the higher tax that I am facing.. I will just have to cut out more of my eating out money or reduce our vacation spending to foot the bills..

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