Now, for the top 5 percent, they’re the ones who typically saw huge gains in their income. 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 in 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 write off 36 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 a determining factor as to whether you’re given that $100 to the homeless shelter down the street.
And so this provision would affect 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’d 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 $100. 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 benefited enormously over the last several years. It’s not going to cripple them; they’ll still be well-to-do. And 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.
Q But it’s not the well-to-do people, it’s the charities. Given what you just said, are you confident the charities are wrong when they contend that this would discourage giving?
THE PRESIDENT: 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 in 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, and to get people back to work again. Then I think charities will do just fine.
Kevin Chappell. Hi, Kevin.
Q Thank you, Mr. President. A recent report found that as a result of the economic downturn, one in 50 children are now homeless in America. With shelters at full capacity, tent cities are sprouting up across the country. In passing your stimulus package, you said that help was on the way. But what would you say to these families, especially children, who are sleeping under bridges in tents across the country?