Committee on Ways and Means

FOR IMMEDIATE RELEASE
CONTACT: Press Office
July 12, 2001 (202) 225-8933

WASHINGTON – Taxpayers who do not itemize their tax deductions would receive tax deductions for charitable contributions paid in cash under a bill passed today by the Committee on Ways and Means. H.R. 7, the Community Solutions Act of 2001, which would provide over $13 billion in tax relief over the next ten years as well as expand federal support for "Individual Development Accounts" for low-income working families, passed by a vote of 23 to 16.

"This proposal is a step forward in encouraging increased charitable giving by American taxpayers and businesses," said Chairman Thomas (R-CA). "We will work to craft a final bill that will meet the President’s principles."

"I commend the House Ways and Means Committee for passing legislation… that includes key elements of my faith-based and community initiatives. This clears the way for consideration by the full House of Representatives. This legislation will stimulate more charitable giving and support faith-based and community organizations in their efforts to help those in need. I will continue to work on a bipartisan basis with Members of the House and the Senate to implement my faith-based and community initiatives," stated President George W. Bush.

The Judiciary Committee considered the constitutional and liability-related issues of H.R. 7 and passed their portion of the bill on June 28, 2001.

Highlights of the charitable giving provisions and the individual development account (IDA) component in this bill are outlined below.

• Taxpayers who do not itemize their tax deductions would be able to receive tax deductions for charitable contributions paid in cash. The deduction would be in addition to their standard deduction. (Maximum deduction of $25 single filer/$50 for joint filer in 2002 and 2003; $50 single filer/$100 joint filer in 2004 through 2006; $75 single filer/$150 joint filer in 2007 through 2009; and $100 single filer/$200 joint filer in 2010 and thereafter).
• Taxpayers age 70 ½ and above would be able to exclude from income any distributions made from Individual Retirement Accounts (IRAs) for charitable purposes.
• The excise tax that private foundations must pay on their net investment income would be simplified and reduced from 2 percent to 1 percent.
• The current-law tax rules that apply to donations of food inventory by C corporations would be expanded to all trade or businesses. The rules for determining fair market value would be clarified.
• The cap on the amount of charitable contributions a corporation may deduct would be increased from 10% to 15% of their taxable income (10% to 11% in 2002 through 2007, 12% in 2008, 13% in 2009, and 15% in 2010 and thereafter).
• Like partners in a partnership, shareholders in an S corporation would be allowed to take a full charitable deduction for property contributed to a charitable organization by the S corporation.
• Title III of H.R. 7, as amended, would double the annual funding for the current IDA program from $25 million to $50 million and extend that program for an additional five years.