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House passes tax cut for donations

Americans who don't itemize deductions will be able to deduct $250 in charitable giving a year if the bill is eventually signed by President Bush.

By Associated Press
Published September 18, 2003

WASHINGTON - The House on Wednesday passed more than $12-billion in tax cuts to encourage charitable giving, while some Democrats said the bill's generosity will cost future generations billions in debt.

The bill, passed 408-13, is the legislative offspring of President Bush's effort to give religious organizations federal money and encourage them to take a bigger role in providing social services. All west-central Florida representatives voted yes.

The biggest tax break gives charity-contribution incentives to taxpayers who can't deduct charitable donations from their taxes because they don't itemize their deductions. Taxpayers using the standard deduction could deduct up to $250 in charitable contributions. The deduction would be in effect for two years.

Rep. Harold Ford, D-Tenn., said the deduction will reward those who regularly give small amounts to their churches or other local charities.

"They want to give, but they also want to have money to pay the bills," Ford said. "This bill is one way we can empower people to give more to charity, for it empowers those whose compassion runs deep, especially those who do not have deep pockets."

Other Democrats praised the bill but argued its $12.7-billion, 10-year cost should be paid for by shutting down corporate tax shelters. The Senate's version of the bill, passed in April, included language targeting illegal tax shelters and would cost the Treasury nothing.

"For every tax cut we give today, it goes on the deficit, and your kids and your grandkids are going to pay for it," said Rep. Jerry Kleczka, D-Wis., calling himself "the skunk at the picnic."

The House rejected, 220-203, a Democratic effort to push a bill similar to the Senate's. The Senate reduced the bill's cost to zero by balancing the tax breaks with a ban on transactions corporations use solely to reduce their taxes but which have no apparent business purpose. Majority Whip Roy Blunt, R-Mo., said lawmakers have not scheduled a meeting to work on a compromise between the House and Senate bills, but he said he expected the bill will be completed and sent to the president this year.

Also in the House Wednesday:

INTERNET TAXES: Connections to the Internet would remain tax-free under a bill the House passed Wednesday.

The legislation, passed with bipartisan support, makes permanent a ban on taxing Internet connections. A temporary ban on the taxes, enacted in 1998, runs out on Nov. 1.

MEDICARE OVERHAUL: Thirteen conservative Republican lawmakers threatened Wednesday to oppose a Medicare prescription drug program if it costs more than $400-billion over the next decade.

The House in June passed the Medicare plan by a single vote. It would help seniors buy prescription drugs under the Medicare health care program.

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