Huffington Urges New Tax Breaks for Charitable Gifts

Seeking to “encourage America’s remarkable spirit of giving,” Rep. Michael Huffington (R-Santa Barbara) unveiled legislation Thursday that he said would provide tax breaks to people of all income levels who contribute to charities.

The bill, supported by several charity groups, including the United Way of America, would amend the federal tax code to remove limits on charitable deductions for the wealthiest taxpayers while extending relief to lower-income workers who do not itemize their tax returns.

Several tax experts said the major beneficiaries of the bill would be millionaire philanthropists like Huffington.

“It’s sort of a strange piece of legislation,” said Michael Ettlinger, tax policy director for the Washington public-interest group Citizens for Tax Justice. “The bottom line is you’re helping out a few very rich people who give a lot to charities . . . and a few low-income people who give a surprisingly large percentage of their incomes to charity.”

These experts also said it does not provide tax incentives to people at all income levels, as Huffington contended. This gap would include about 30 million taxpayers who itemize their deductions and earn less than $100,000 a year, according to an IRS spokesman. Those taxpayers already can deduct much of their charitable giving.

Huffington, a candidate for the Republican nomination for the U.S. Senate in June, said the measure is much more than a simple tax relief bill.

“It is a call to community and service,” said Huffington, 46, who acquired an estimated $70 million fortune after working at his father’s oil company for 13 years. “It is a call for Americans to join together and build a greater and nobler nation.”

The goal of the legislation dovetails with the theme of volunteerism central to Huffington’s Senate campaign as well as a new book by his wife, Arianna Stassinopoulos Huffington. The Huffingtons threw a party at the Capitol on Thursday evening to celebrate the book.

Huffington’s primary opponent, former Rep. William E. Dannemeyer, called the tax legislation a credible idea. But Dannemeyer criticized Huffington for offering a bill that would cost the U.S. Treasury an estimated $6 billion a year without finding a way to pay for it.

Huffington, flanked by two administrators of Washington-area nonprofit agencies, announced the proposal--his second original piece of legislation in 16 months--at a late morning news conference on the Capitol lawn.

“I know in my heart and in my mind that more and more people will give money,” Huffington said. “My guess is you are talking about tens of billions of dollars going into nonprofit groups on a yearly basis.”

Conceding that the legislation had virtually no chance of passing this year, Huffington said he would introduce it again next year if he is elected to the Senate. The bill is supported by 34 members of Congress, all Republicans but for three.

Hannah M. Hawkins, founder and director of Children of Mine Center, an after-school community recreation facility in Washington, said the proposal would boost the number of donations from lower- and moderate-income workers.

“There are some who would donate but they need a nudge, and this bill, my brothers and sisters, would fully give that nudge,” Hawkins said.

Huffington said he believes the bulk of the increased contributions generated by his legislation would come from taxpayers who do not itemize their deductions.

“I want people who earn $30,000 yearly to have that opportunity to give,” he said.

Under the plan, a married couple making $30,000 a year who gave $1,000 to charity would get a $102 tax break, according to an IRS spokesman. A couple earning $40,000 who contributed $2,000 would receive $252.

Three tax experts contacted by The Times said they doubted that lower- to middle-income taxpayers who do not own a house or pay enough in taxes to itemize their deductions would take advantage of such incentives.

But the bill would be a boon to the exceedingly wealthy who give a substantial amount of money to charities without claiming other large deductions, said Don Roberts of the IRS.

The proposal revives a tax incentive for charitable giving by the wealthy that was eliminated by Congress in 1990. Huffington cited an independent research study that found charitable giving dropped 18% for people making $100,000 or more between 1989 and 1991.

Huffington, who donates his $133,644 annual salary to children’s charities in his district, said he has not even thought about how the proposal would affect his tax return. He said that since 1990 he has given millions of dollars to charity.