February 10, 2000 | Read Time: 2 minutes
The tax deductibility of gifts of stock, art, or other items that have risen in value has become an issue in the Republican race for the presidential nomination.
Sen. John McCain, the Arizona Republican who is seeking the GOP presidential nomination, is promoting a plan to eliminate a key tax benefit that donors receive when they make such gifts.
Under current law, a donor may claim a charitable-tax deduction based on the current market value of the appreciated property rather than the lower price that the donor originally paid. If elected president, Mr. McCain said he would urge Congress to revise the law to allow a donor to claim only the original price of the gift as a deduction, not the item’s appreciated value.
Mr. McCain’s chief opponent for the Republican nomination, Texas Gov. George W. Bush, opposes a change in current law.
Mr. McCain’s campaign issued a statement that “wealthy taxpayers save almost $1.5-billion a year on their tax bills from this loophole.” Such taxpayers give away “fancy paintings or appreciated stock on which they have never taken a gain or paid tax,” while “25,000 more working families pay higher taxes to pick up the bill,” the campaign said.
Mr. McCain told NBC that current law is “egregious.” “Somebody acquires a painting for $1,000, goes out and has somebody appraise it for $1-million, and then they give it and get a huge write-off,” he said. “That’s what I’m trying to stop.” He added: “I’m not interested or committed in any way to harming the deduction for charitable giving.”
But Charitable Accord, a national coalition of charities, said Mr. McCain’s proposal could undermine philanthropy because it would, if put into effect, inevitably result in donors making fewer gifts.
“Charities fear the removal of tax incentives for appreciated property gifts, especially following a long rally in the financial markets in recent years,” said a statement issued by Charitable Accord. “Many charities have reported a dramatic increase in the proportion of contributions made with common stock during the 1990’s.”
