January 27, 2000 | Read Time: 2 minutes
In his State of the Union address, President Clinton urged Congress to pass tax proposals aimed at promoting philanthropy.
The plan, which would cost the federal government $14-billion over 10 years to carry out, is the result of discussions at the first-ever White House conference on philanthropy, which President Clinton and his wife, Hillary, held in October.
Mr. Clinton is urging members of the House and Senate to adopt legislation that would:
- Allow people who do not itemize deductions on their federal income-tax returns to write off a portion of their charitable contributions.
People would be eligible to deduct 50 per cent of the amount of their total contributions that exceed $500 each year. The proposal would be phased in over several years.
Such a change would open up the possibility of a charitable deduction to the 70 per cent of taxpayers who do not itemize. The White House says the change would “boost contributions to charitable organizations, particularly community and faith-based groups.”
Allowing people who don’t itemize to claim deductions, Mr Clinton said, “is nothing but fair, and it’ll get more people to give.”
- Make it more attractive for individuals to donate items that have appreciated significantly in value, such as art, real estate, and stocks.
Under existing law, donors who claim a tax deduction for gifts of appreciated assets to charities are generally limited to writing off no more than 30 per cent of their adjusted gross income. Donors who give appreciated assets to private foundations generally cannot deduct more than 20 per cent of their adjusted gross income.
The White House says such limitations are “complex and can place burdens on individuals who choose to give substantial portions of their incomes to charity.” The President seeks to increase the deduction limits to 50 per cent for gifts of appreciated property to charities and 30 per cent for such gifts to foundations.
- Simplify and reduce the excise tax on private foundations to make it “easier for foundations to give in times of need.”
Foundations now must pay an excise tax of up to 2 per cent on investment income, although they can qualify for a reduced tax rate if they distribute at least a certain percentage of their assets to charity over a period of years.
The President wants Congress to simplify and in many cases reduce the excise tax by replacing a tiered tax structure with a single, 1.25-per-cent excise tax for all private foundations.
In his speech, Mr. Clinton said he was proud that his Administration had encouraged “a new spirit of service” but that more needed to be done “to help Americans help each other.” He specifically urged more support for faith-based organizations that fight poverty and drug abuse.
More information on the State of the Union address can be found on the White House Web site.
For more on the White House conference, see The Chronicle’s preview and coverage.
