August 9, 2001 | Read Time: 2 minutes
A bill containing several charitable tax incentives affecting charities and foundations faces an uncertain future in the Senate after it was passed last month by the House of Representatives.
By a vote of 233 to 198, the House approved the tax incentives as part of President Bush’s effort to help faith-based groups.
Several senators say they oppose the measure because one section of it would allow religious groups that receive federal money to be exempt from state and local antidiscrimination laws. Senate Majority Leader Thomas Daschle, Democrat of South Dakota, has promised a vote on the bill but said that may not happen until next year.
In a speech last week, President Bush urged Congress to act more quickly, saying he wants to make sure the measure “continues its momentum.”
The legislation, H.R. 7, would allow:
- People who do not itemize on their taxes, estimated to be about 70 percent of Americans, to write off up to $25 in charitable donations in 2002 and 2003. The deduction, which is doubled for couples, would gradually increase to $100 after 2010. The White House proposed a larger deduction, but House Republicans cut the size of it, saying the provision cost the federal treasury too much money.
- People over age 70 1/2 to make charitable donations directly from their individual retirement accounts without having to pay taxes.
- Corporations to write off 15 percent of their taxable income for charitable contributions each year. The annual limit now is 10 percent.
- Private foundations to pay a smaller percentage of their net investment income in excise taxes. Foundations would be subject to paying up to 1 percent of investment income, compared with current law that now forces them to pay up to 2 percent on such income.
A bill pending in the Senate contains the tax provisions to encourage charitable giving, but not the expansion of federal social services to religious groups.
That legislation, S. 592, would allow non-itemizers to deduct a greater amount in charitable giving than the House-approved bill. The Senate bill would allow taxpayers to write off 50 percent, gradually increasing to 100 percent, of the amount in charitable gifts they make that exceeds $500.
To view the text of the bill as debated by the full House, or the Senate bill, go to http://thomas.loc.gov.
