November 29, 2001 | Read Time: 1 minute
President Bush last week asked Congress to pass several tax breaks to encourage charitable giving and to make it easier for small, community-based groups to gain charity status.
Several of the measures are similar to those President Bush proposed earlier this year to help faith-based groups.
Among the new items: A proposal that would require the Internal Revenue Service to create an “EZ Pass” that would make it simpler for charities with fewer than six employees to gain tax-exempt status under Section 501(c)(3) of the tax code.
Other provisions contained in the measure proposed by President Bush would:
- Allow people who do not itemize on their taxes, estimated to be about 70 percent of American taxpayers, to write off a portion of what they give to charity, up to $500 (or $1,000 for people who file joint returns). The deduction, which would be phased in gradually over 10 years, would cost the federal treasury $18.2-billion, according to the White House.
- Allow people age 59 1/2 or older to make charitable donations directly from their individual retirement accounts without paying income taxes on the donated amounts. Estimated cost: $3-billion.
- Extend to all companies the tax deductions that now allow only certain businesses to deduct some or all of the value of the food they give to food banks, and increase the value of the deduction. Estimated cost: $516-million.
- Lower the federal excise tax on private foundations to 1 percent. Foundations currently must pay an excise tax of up to 2 percent on their investment income. Estimated cost: $2.2-billion.
- Increase the annual limit on charitable deductions taken by corporations from 10 percent to 25 percent of a company’s taxable income. Estimated cost: $1.7-billion.
