October 2, 2003 | Read Time: 3 minutes
Legislation designed to encourage more charitable giving has now passed both houses of Congress and awaits a conference between the House and Senate, but some lawmakers continue to raise concerns about whether a charity bill that costs the federal government money can be passed while the federal deficit keeps growing.
The U.S. House of Representatives passed the Charitable Giving Act by a vote of 408 to 13 last month, following the Senate’s approval of the similar Charity Aid, Recovery, and Empowerment Act by a vote of 95 to 5 in April.
Members of the House and Senate now intend to reconcile the bills.
Both bills aim to encourage more charitable giving by allowing people who do not itemize deductions on their federal income-tax returns to write off some of their charitable gifts, and by permitting older people to shift money from their individual retirement accounts directly to charity without paying federal income tax on the withdrawals.
Unlike the Senate bill, however, the House bill includes provisions that would reduce to 1 percent the excise tax on net investment income for private foundations, and several provisions that would prevent foundations from including certain administrative expenses in the 5 percent of assets they are required to distribute every year.
The Senate bill is designed to carry no cost to the federal government. It would increase government revenue by attempting to curb corporate tax abuse.
The House bill would reduce federal revenue by $12.6-billion during the next decade — a budgetary obstacle that concerns some House Democrats who do not want to approve tax cuts without increasing revenue to the federal government.
“The charitable deduction for nonitemizers would encourage people to give only 12 cents for every dollar that is lost to the Treasury,” Rep. John F. Tierney, Democrat of Massachusetts, told members of the House during a debate about the proposed charity legislation. “We need to decide what is the best way for us to spend $13-billion, and I question whether this bill is.”
An amendment that would have added revenue-raising measures similar to those in the Senate’s bill by cracking down on corporate tax abuse was voted down in the House 220 to 203. That rankled some Democrats during floor debate.
“I don’t know why you insist time after time in bringing up bills that cost billions of dollars,” Rep. Sander Levin, a Democrat from Michigan, said to Bill Thomas, a California Republican and chairman of the House Committee on Ways and Means. “As part of the leadership, you’re again asking Republicans to march in lock step with fiscal irresponsibility.”
Rep. Sam Johnson, a Republican from Texas, defended his party, saying: “This tax relief doesn’t just cost the federal government money, but it encourages people to give more money in their communities and to charities they care about.”
Rep. Roy Blunt, Republican of Missouri, who co-sponsored the Charitable Giving Act with Rep. Harold Ford Jr., Democrat of Tennessee, estimated that the House bill would increase charitable giving by $50-billion over the next 10 years.
President’s View
To help prevent a possible stalemate in conference over the revenue-raising provisions, some observers expect President Bush to voice his support for one approach or the other — although his preference is not yet known. The president announced strong support for the House’s Charitable Giving Act before it was passed, saying in a statement that the bill contained “key elements” of his agenda to “expand charitable giving and to strengthen faith-based and neighborhood groups.”
Jim Towey, director of the White House Office of Faith-Based and Community Initiatives, said that the president has been “very open about his desire” to see charity legislation passed as soon as possible.
“What these two bills hold in common is far greater than their differences,” Mr. Towey said. “It seems to me like we’re going to see conferees agree to a compromise, quickly pass the bill in both houses, and see it through to the president’s desk.”
