House lawmakers have introduced a bill that would change the way private foundations pay taxes on their investment income by creating a flat tax rate.

The bill—which was introduced by Rep. Erik Paulsen, a Minnesota Republican, and Danny Davis, an Illinois Democrat—has the same language as proposed legislation that Sen. Charles Schumer, Democrat of New York, introduced in the Senate in March.

Both the House and Senate bills call for eliminating the existing two-tiered tax rate and setting a flat tax of 1.39 percent. That figure is slightly higher than the rate included in a plan by President Obama, which would create a flat excise tax of 1.35 percent.

Though they are exempt from federal income tax, private foundations are currently required to pay 2 percent of their net investment earnings to the government, unless they increase their giving beyond the average sum they gave in the previous five years, in which case the rate would be reduced to 1 percent.

The system was designed to get foundations to give more, but some believe it has had the opposite effect. Foundations that sharply increase giving in one year raise their average donation amount and therefore must continue to give at high rates in subsequent years to avoid the 2-percent tax rate. Some foundations may be reluctant to raise their giving in any one year as a result.

Proponents of the change, including the Council on Foundations, say the move would encourage grant makers to give more during the current hard times for charities.