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Senate bill would widen deductions for charity

©Associated Press
February 6, 2003

WASHINGTON -- The Senate Finance Committee voted Wednesday to create new tax incentives for charitable donations, part of an effort by majority Republicans to reinvigorate President Bush's 2-year-old "faith-based initiative."

The measure allows taxpayers who do not itemize tax deductions to write off a portion of their charitable donations and permits charitable gifts to be made tax-free from individual retirement accounts.

Other provisions are designed to encourage the donation of food supplies, books and used computer equipment.

The bill also increases funds for a federal program that distributes money to the states for a variety of social programs.

The committee action "brings us one step closer to creating incentives for Americans to donate more to charities, many of which are facing tough financial times," Bush said in a statement. "We must also work to level the playing field for community and faith-based organizations that provide effective social services to our fellow citizens who are in need."

The legislation was sent to the full Senate, where a struggle is expected over the conditions that would apply to religious-groups seeking federal social service funds.

The provisions would permit groups to get federal dollars even if their facilities have religious icons on the walls, if they have religious language in their charters or if they have religious names.

"The proposed legislation creates a more level playing field for faith-based charities by ensuring they can't be discriminated against in applying for government funds," Sen. Rick Santorum, R-Pa., said in a statement.

But Sen. Dick Durbin, D-Ill., said he and other lawmakers intended to seek passage of amendments designed to assure the legislation does not breach the constitutional wall between church and state.

In particular, he said, he wanted to make sure that religious groups were "not using federal dollars to force religious views" on recipients of their services.

A spokesman for Sen. Jack Reed, D-R.I., said Reed wanted to ensure that religious groups receiving federal funds could not discriminate based on religion, gender or other categories in their hiring practices. Religious groups that are exempt from such antidiscrimination laws do not receive federal funds.

Senate Republican aides said they expected the legislation would come to the full Senate in the next several weeks.

Shortly after taking office in 2001, Bush urged Congress to pass legislation opening a dozen new social programs to religious groups, who supporters say are well-suited to offer help.

The legislation stirred enough controversy to force the administration to scale back its proposals sharply. Even then, Congress adjourned last fall without taking action.

According to committee documents, the cost to the Treasury of the charitable giving-related tax incentives and increased funding was nearly $12-billion over the next decade -- although that estimate was held down because the tax break for nonitemizers would expire in two years.

The cost was offset by provisions designed to curtail the use of tax shelters by businesses.

The charitable deduction provision would allow nonitemizers to claim a deduction for donations in excess of $250 a year for individuals and $500 for couples. Beyond those levels, taxpayers would be allow to deduct $1 off their income for each $1 in donations, up to a limit of $250 for individuals and $500 for couples.

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