November 1, 2001 | Read Time: 1 minute
Several U.S. senators are urging passage of legislation that aims to stimulate giving by creating new tax incentives for foundations and other charitable donors.
Sen. Rick Santorum, Republican of Pennsylvania, and Sen. Evan Bayh, Democrat of Indiana, say charities, especially local ones, need help because many people who usually donate to them during the holiday season have already given money to aid victims of the September 11 attacks.
The tax incentives will motivate donors to open their wallets again and give as usual to local charities, the senators say. The Senate could decide on the tax breaks by the end of the year, according to the senators.
The tax breaks are contained in two bills, S. 592 and S. 1300. The bills would:
- Allow people who do not itemize on their taxes, estimated to be about 70 percent of American taxpayers, to write off half of what they give to charity over $500. Couples who file joint tax returns could deduct half of the amount of charitable gifts in excess of $1,000. The deduction level would gradually increase by 2007 to 100 percent of charitable gifts exceeding $500.
- Allow individuals age 59 1/2 or older to make charitable donations directly from their individual retirement accounts without paying income taxes on the donated amounts.
- Extend to all companies the tax deduction that now allows certain ones to deduct some or all of the value of the food they give to food banks.
- Repeal the federal excise tax on private foundations. Foundations currently must pay an excise tax of up to 2 percent on their investment income.
The senators say they are trying to incorporate the tax breaks into a larger bill. Some observers speculate the breaks might be wrapped into a bill to stimulate the economy.
To view the text of the bills, go to http://thomas.loc.gov.
