July 29, 1999 | Read Time: 1 minute
Congress is considering an array of tax proposals that could have a big effect on charities and their donors if the proposals are eventually passed into law.
Measures in the House and Senate would slash personal income-tax rates and lower the rates on estates — or even phase out the estate tax altogether. Fund raisers worry that elimination of the estate tax — as well as the accompanying deduction for charitable bequests — might cause a significant decline in major gifts from the estates of wealthy donors.
Among ideas under review by Senators:
* Allowing people who do not itemize on their federal income-tax returns to claim a charitable tax deduction for donations of up to $50 for individuals and $100 for married couples.
* Providing an incentive to donors who want to give funds to charity from their individual retirement accounts. People age 701/2 and older would be able to donate I.R.A. assets to charity directly — or through a charitable remainder trust or other planned gift — without having to count the funds as income and pay taxes on them.
* Increasing the percentage limits on charitable deductions. For example, many donors who make substantial gifts in relation to their income by law are not allowed to write off more than 50 per cent of their adjusted gross income each year; donations above that amount could be deducted in following tax years, however. One proposal would gradually increase that ceiling to 70 per cent by 2007.
* Changing a law that now limits spending by charities on “grassroots lobbying” to 25 per cent of total lobbying expenses. Under review: removing the limit on grassroots spending so that charities would face restrictions only on the total dollars spent on all lobbying.
