HOUSE GOP scales back Bush charitable tax plan
Wednesday, July 11th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ New tax breaks to encourage donations to charity would amount to just a few dollars per person, at least at first, and much less than President Bush proposed under legislation being considered Wednesday.
House Republicans have significantly scaled back Bush's plan for new tax breaks, particularly his centerpiece proposal to help the 70 percent of Americans who do not itemize on their taxes.
The bill to be considered Wednesday by the House Ways and Means Committee would allow taxpayers to deduct just $25 in donations in 2002 and 2003, meaning they would not have to pay taxes on up to $25 given to charity.
The maximum deduction would slowly grow to $100 by 2010 and remain there. The maximums would be double for couples filing their taxes together.
The Bush plan also would have phased in the new tax break. But by 2010, taxpayers would be allowed to deduct 100 percent of their contributions to charity. The Joint Committee on Taxation estimated that the Bush plan would cost $84 billion over 10 years.
By contrast, the plan to be considered Wednesday will cost $6.4 billion for this provision, with various other pieces of the package bringing the total cost to about $13 billion over 10 years.
Democrats balked at the initial price tag, saying the government could not afford such a large tax break on top of the $1.3 trillion, 10-year package just signed into law. They also complained that Bush did not make the charitable tax breaks a priority when that package was being negotiated.
Ways and Means spokesman Mark Gundersen declined to explain why the package was cut back.
``The bill represents the ideas that the committee believes to be the best policy,'' he said. He added that ''$6.4 billion in tax relief is not a pittance. It can go a far way toward encouraging individuals to start giving to charitable organizations.''
The bill also:
_Allows taxpayers who are 70 1/2 and older to make charitable contributions from their individual retirement accounts without tax penalty. Cost: $2.2 billion over 10 years.
_Lets corporations deduct more of their charitable contributions, capping them at 15 percent of their taxable income, up from 10 percent. Cost: just under $1 billion over 10 years.
_Cuts excise taxes for certain charitable foundations to 1 percent of net investment income. Cost: $2.2 billion over 10 years.
The tax bill is part of a larger piece of legislation that would open up government programs to religious charities. That part of the bill, which has been significantly more controversial, already cleared the House Judiciary Committee.
House leaders hope the entire package can be voted on by the House before Congress adjourns for its August break.