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President Bush Renews Request for Charitable-Giving Incentives
By Elizabeth Schwinn
Washington
President Bush on Monday proposed several new tax breaks to stimulate charitable giving this year and beyond. The provisions would cost the federal treasury an estimated $20-billion over the next 10 years. Although most of the provisions would take effect for the 2003 tax year, the proposals were contained in Mr. Bush's budget for fiscal 2004, which begins October 1.
Many of the tax proposals are similar to those the President asked Congress to pass last year, but in most cases, he is making the incentives less generous. For example, he proposes allowing people who do not itemize on their taxes to deduct up to $250 for charitable contributions. Last year, he suggested allowing such people to deduct up to $500.
Congress last year failed to approve Mr. Bush's request to expand incentives for giving to charity. The House of Representatives passed a bill containing some of the incentives, but the Senate did not act on the measure before the session ended. The Senate Finance Committee is expected to vote this week on a bill containing some of Mr. Bush's requested charitable tax incentives.
Mr. Bush's budget plan 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 $250 (or $500 for people who file joint returns). The deduction could only be claimed by people whose total charitable donations exceed $250. For example, someone who gave $400 to charities could deduct $150. The deduction, which would be phased in gradually over 10 years, would cost the federal treasury $199-million for donations made in the 2003 tax year and $12.6-billion over 10 years, according to the White House.
- Allow people age 65 or older to make charitable donations directly from their individual retirement accounts without paying income taxes on the donated amounts. Estimated cost: $66-million in 2003; $4-billion over 10 years.
- Extend to all companies the tax deductions now available to certain types of businesses that donate food to food banks. The proposal would also increase the value of the deduction. Estimated cost: $19-million in 2003; $872-million over 10 years.
- 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. Foundations say that lower taxes would enable them to give more money to charities. Estimated cost: $15-million in 2003; $1.4-billion over 10 years.
- Allow nonprofit groups -- except for hospitals -- to refinance an unlimited amount of taxable debt by repealing a $150-million limit on such refinancings. Estimated cost: $2-million in 2003; $82-million over 10 years.
- Allow individuals to exclude from the taxable incomes 50 percent of any capital gain they obtain by selling on property for conservation purposes, such as to a land-conservation organization. Estimated cost: $47-million over 10 years.
The president also asked Congress to make permanent many of the tax cuts contained in the 2001 tax-cut law, including a repeal of the estate tax. The 2001 law gradually reduces the estate tax over 10 years before repealing it for one year in 2010. Some nonprofit groups fear that eliminating the estate tax will hurt giving because it will remove an incentive for the wealthy to leave charitable bequests.
Making all of the 2001 tax breaks permanent, including the estate tax, would cost an additional $522-billion over the next 10 years, the administration said. The White House did not break down the cost of extending each of the tax cuts contained in the plan.
In addition to the tax incentives, the president is seeking $100-million for the Compassion Capital Fund to help charities that aid needy Americans, including $50-million for a program to recruit and train mentors for more than 2 million disadvantaged young people and children with one or more parents in prison. Federal agencies would work with nonprofit, community, and religious groups that train mentors and place them with children in need.
Mr. Bush also called for a $200-million increase in federal funds next year to help people with drug addictions find treatment from the most effective programs, including those offered by religious institutions. The Bush administration said the funds would pay for a new program to allow 100,000 more Americans to find assistance through vouchers they could use at treatment facilities.
The House and Senate will spend the next few months debating President Bush's budget proposals as they draft their version of a spending plan for fiscal 2004.