February 10, 2000 | Read Time: 4 minutes
As Congress begins to consider next year’s federal budget, President Clinton is urging the House and Senate to pass three tax proposals that are aimed at promoting philanthropy.
The plan, which would cost the federal government $14-billion over 10 years to carry out, is the result of discussions at the first-ever White House conference on philanthropy, which Mr. Clinton and his wife, Hillary, held last autumn (The Chronicle, November 4, 1999).
In his State of the Union address, Mr. Clinton asked Congress to adopt legislation that would allow people who do not itemize on their federal income-tax returns to write off a portion of their charitable contributions.
Individuals would be eligible to deduct 50 percent of the amount of their total contributions that exceed $1,000 each year until 2006, when the dollar-threshold amount would drop to $500 a year. (For married people filing joint returns, the threshold amount would start at $2,000 next year and then drop to $1,000 in 2006.)
Such a change would open up the possibility of a charitable deduction to the 70 percent of taxpayers who do not itemize their tax returns.
The White House said the plan would “boost contributions to charitable organizations, particularly community and faith-based groups.”
Allowing people who don’t itemize to claim deductions, Mr. Clinton told Congress in his speech, “is nothing but fair, and it’ll get more people to give.”
The President’s approach is expected to get serious consideration on Capitol Hill.
His proposal is similar to a bill introduced in Congress last year that drew the support of dozens of Senators and Representatives from both parties and was backed by Independent Sector, a national coalition of major charities and grant makers.The Senate passed a different version of the idea last year, but the bill eventually died. Republican presidential candidate Gov. George W. Bush has also promoted the concept of a charitable deduction for people who do not itemize on their tax forms.
The main obstacle to passage of President Clinton’s proposal: its multibillion-dollar price tag.
People who don’t itemize were allowed to claim charitable deductions in the early 1980’s, but Congress removed the option when it overhauled the federal tax code in 1986.
The White House also announced that Mr. Clinton is proposing to make it more attractive for individuals to donate items that have appreciated significantly in value, such as art, real estate, and stocks.
Under existing law, donors who claim a tax deduction for gifts of appreciated assets to charities are generally limited to writing off no more than 30 percent of their adjusted gross income. Donors who give appreciated assets to private foundations generally cannot deduct more than 20 percent of their adjusted gross income.
The White House said such limitations are “complex and can place burdens on individuals who choose to give substantial portions of their incomes to charity.”
The President seeks to increase the deduction limits to 50 percent for gifts of appreciated property to charities and 30 percent for such gifts to foundations.
Mr. Clinton also offered a proposal that the White House said would simplify and reduce the excise tax on private foundations to make it “easier for foundations to give in times of need.”
Foundations currently must pay an excise tax of up to 2 percent on investment income, although they can qualify for a reduced tax rate if they distribute at least a certain percentage of their assets to charitable causes over a period of years.
The President wants Congress to simplify and in many cases reduce the excise tax by replacing a tiered tax structure with a single, 1.25-percent excise tax for all private foundations.
In his State of the Union message, Mr. Clinton told lawmakers that he was proud that his administration had encouraged “a new spirit of service” but that more needed to be done “to help Americans help each other.”
The President specifically urged more support for faith-based organizations that fight poverty and drug abuse.
Several prominent non-profit leaders were quick to lend their support to President Clinton’s proposals.
Dorothy S. Ridings, president of the Council on Foundations, in Washington, called the ideas “the most comprehensive and significant package I’ve seen for promoting charitable giving.” She added: “These provisions will make charitable giving simpler, fairer, and more generous.”
Additional information on Mr. Clinton’s State of the Union address can be found on the White House Web site at http://www.whitehouse.gov/WH/SOTU00.
