House Passes Bill Designed to Encourage Gifts to Charity

Under threat of a presidential veto, the House of Representatives on Thursday passed a tax bill designed to encourage gifts to charity on a bipartisan, 277-130 vote.

The bill would make permanent three temporary tax items that have been regularly extended on an annual basis. The measures would allow older people to lower their taxable income by donating money from their Individual Retirement Accounts to charities and provide tax benefits for donations to food banks and setting aside land for conservation.

Two other measures in the legislation are not so-called “tax extenders.” The new items would lower the excise tax on private foundations from 2 percent to 1 percent and extend the deadline for taxpayers to claim a deduction for a charitable gift from December 31 until tax day, April 15, of the following year.

The three temporary tax items the House voted to extend are among 60 expired tax provisions. The Democratic-led Senate has shown a preference to pass all of them at once, rather than split them apart, as the Republican-controlled House has done.

President Obama said he opposed the bill because the House leaders did not provide a way to offset the $16-billion in tax revenues that would be lost if the bill passed into law.

“As with other similar proposals, Republicans are imposing a double standard by adding to the deficit to continue and create tax breaks that primarily benefit higher-income individuals, while insisting on offsetting the proposed extension of emergency unemployment benefits and the discretionary funding increases for defense and non-defense priorities,” he said in a statement.

Charity leaders have expressed confidence that the tax extenders will eventually pass both chambers, but it is not certain whether the provisions on the foundation excise tax and charitable-deduction deadline will be part of a final bill.