WASHINGTON – Saying Americans should help each other, President Clinton has proposed tax breaks to encourage more donations to charity. His tax-relief ideas would cost $14 billion over the next 10 years.
A similar theme has been sounded by George W. Bush in his campaign for the Republican presidential nomination, so Clinton’s proposals may be hard for the GOP-controlled Congress to resist.
Clinton outlined his plan in his State of the Union address January 27, urging House and Senate members to take action in three areas:
– Allow taxpayers who don’t itemize on their federal income tax returns to deduct 50 percent of contributions that exceed $500 a year.
– Change rules to make it easier for charitable foundations to make gifts in time of need by simplifying and reducing the excise tax.
– Make it easier for individuals to donate such items as real estate and stock after they have appreciated in value.
Clinton said the part of the plan affecting people who don’t itemize would apply to about 70 percent of U.S. taxpayers, many of them lower- and middle-income individuals who already make donations, particularly to faith-based groups and community charities – but who get no tax incentives to do so.
The proposal to “is nothing but fair, and it’ll get more people to give,” Clinton said.
The tax breaks would be phased in over several years.
Clinton also wants to ease rules on foundation giving. Foundations now must pay up to 2 percent on investment income, depending on the amount they distribute from year to year. Boosting charitable gifts in time of great need, such as the aftermath of a hurricane, exposes a foundation to higher tax rates when the need has been met and giving has been reduced once again.
Clinton wants Congress to replace the tiered tax structure with a single, 1.25 percent excise tax for all private foundations.
Clinton also want to change the the existing law that lets donors who give assets to charities write off no more than 30 per cent of their adjusted gross income.
If they give to private foundations, the tax deduction is more stringent – no more than 20 percent of income.
On its Web site, the White House says these “multiple limitations are complex and can place burdens on individuals who choose to give substantial portions of their incomes to charity.”
Clinton wants the House and Senate to adopt legislation that would increase the deduction limits to 50 per cent for gifts of appreciated assets to charities and 30 percent for gifts to private foundations.
In his televised speech, Clinton said the nation’s prosperity brings obligations.
“Never before has our nation enjoyed, at once, so much prosperity and social progress with so little internal crisis or so few external threats,” he said. “Never before have we had such a blessed opportunity – and therefore such a profound obligation – to build the more perfect union of our founder’s dreams.”
He said he was proud his administration had encouraged a “new spirit of service” but more needed to be done “to help Americans help each other.”
Clinton’s proposed tax breaks for charitable giving follow the emphasis he and his wife, Hillary Rodham Clinton, put on fostering a tradition of generosity when they held a first-ever White House Conference on Philanthropy last October.
— Cindy Stiff