April 2 (Bloomberg) -- The U.S. Senate rejected a proposal by President Barack Obama to finance an overhaul of the nation’s health-care system by limiting the ability of the well-to-do to take tax deductions for charitable contributions.

The chamber unanimously approved an amendment to a pending budget plan that rejects the proposal to limit the size of itemized deductions that can be taken by those earning more than $250,000.

Obama proposed using the estimated $318 billion such a change would generate to help finance a health-care overhaul, which he says will cost at least $630 billion. Lawmakers said they feared the effect of such a tax change on charities.

“The Senate sent a clear message to the president,” said Senator Bob Bennett, a Utah Republican who sponsored the amendment. “Charities benefit greatly from the donations made by individuals in this income bracket, and raising taxes on these contributions would be a disservice to Americans and the millions of charities across the country.”

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: April 2, 2009 17:22 EDT