House Approves Expanding Tax Breaks for Donations

More than 80 million taxpayers who don’t itemize their deductions would be eligible for a new write-off of up to $250 per person for charitable donations under a bill the House overwhelmingly approved Wednesday.

The bill would also double the allowable charitable deductions for businesses, ease rules on donations from individual retirement accounts and take other measures to spur giving to qualified nonprofit organizations.

The bill, which passed 408 to 13, closely resembles a measure that passed the Senate this year. Key lawmakers predicted chances are good that agreement could be reached on a compromise version.

“I look forward to sending this bill to the president’s desk in short order, to marshaling America’s resources to help more of our own, and to making a difference in the way people are encouraged to do things for others in their communities,” said House Majority Whip Roy Blunt (R-Mo.), a chief sponsor.

Both the House and Senate bills are vestiges of the “faith-based initiative” that Bush pushed after taking office in 2001. The measures do not include provisions the White House had sought to make it easier for religious groups that sponsor social services to receive federal money.

Democrats have blocked those provisions, arguing they would breach the constitutional separation between church and state and benefit groups that, for religious purposes, discriminate in their hiring.

Administration allies say those regulatory reforms Bush proposed are moving forward in other legislation and through executive actions that have helped religious groups obtain government contracts.

The handful of lawmakers voting against the House bill Wednesday -- all Democrats -- argued that the nation could not afford its $12.7-billion cost over the next decade.

“I feel somewhat like the skunk at the picnic, but it’s time that this Congress act more responsibly,” said Rep. Gerald D. Kleczka (D-Wis.), an opponent. “Every tax cut we give today goes on the deficit, and your kids and grandkids are going to pay it. Not us.”

The only Californian to oppose the bill was Rep. Pete Stark (D-Hayward), who argued that Congress should instead pass legislation to expand a child tax credit for low-income taxpayers.

On a largely party-line vote, Republicans defeated a Democratic amendment to defray the cost of the tax break by closing what critics called corporate tax loopholes.

The Senate version, approved 95 to 5 in April, includes provisions to offset the cost of the tax breaks, meaning that the issue could become a sticking point in negotiations. The Senate legislation also would increase federal social-service grants by more than $1 billion, a step House Republican leaders rejected.

Both bills would give a new break to the estimated 86 million taxpayers who do not itemize deductions on their tax returns. Under the proposal, these low- to middle-income taxpayers would be allowed to take the standard deduction and deduct an additional amount of up to $250 per person for gifts to charity exceeding $250 in a year. For instance, a person who gave $251 to charity could deduct $1 and a person who gave $500 could deduct the full $250. Joint filers could deduct up to $500 for giving $1,000.

Currently, only those who itemize deductions, who are generally wealthier, are eligible for the charitable deduction.

Under the House bill, the tax break for individuals would be in effect in 2004 and 2005. In the Senate version, the provision would be in effect for the 2003 and 2004 tax years.

But Blunt said that if the bill becomes law, Congress would not allow the tax break for individuals to lapse.

The House bill, like its Senate companion, would allow tax-free treatment of qualified charitable donations from individual retirement accounts. The House would take that step for taxpayers at age 70.5; the Senate, at age 59.5.

Both bills also contain an array of tax breaks to encourage charitable giving by businesses. The House version would gradually increase a cap on corporate deductions for charitable giving.

Proponents said the new tax breaks would be a good investment. House sponsors said their bill would spur $40 billion or more in philanthropy.

“This bill is one way we can empower people to give more to charity ... especially those who do not have deep pockets,” said Rep. Harold E. Ford Jr. (D-Tenn.).

The White House praised the bill for including “key elements of the president’s agenda to expand charitable giving and to strengthen faith-based and neighborhood groups to help them better serve Americans in need.”