Senate passes bill on new tax breaks

Measure for donations OK'd after dropping much of `faith-based' initiative

April 10, 2003|By Nick Anderson | Nick Anderson,SPECIAL TO THE SUN

WASHINGTON - More than two years after President Bush proposed allowing more federal aid to flow to religious social-service groups, the Senate passed a slimmed-down version of the bill yesterday that would expand tax breaks for charitable donations but omit much of his original "faith-based" initiative.

The Senate action, on a 95-5 vote, signaled a Republican retreat on a high-profile item on Bush's domestic agenda.

Democrats had threatened to block any effort to pass Bush's proposals to help religious charities qualify for more federal grants.

They argued that the proposals could upset the American tradition of separation of church and state.

"Once you have opened this door and start talking about federal dollars given to religion for social services, you open up a can of worms," said Sen. Richard J. Durbin, an Illinois Democrat.

Senators strike a deal

So Durbin struck a deal with Sen. Rick Santorum, a Pennsylvania Republican, and a sponsor of the Bush faith-based initiative, to limit the bill's scope.

Mindful that the president's bill - proposed days after he took office in January 2001 - had languished since then without a Senate vote, Santorum said he agreed to compromise because charities were in urgent need of help.

"That's part of the legislative process," he said.

But Santorum pledged a renewed push for the rest of the Bush initiative when the Senate debates welfare reform.

He also said that many of the charitable donations that could be spurred by the bill would go toward religious groups - in essence, achieving what Bush has wanted all along.

In a statement, the president applauded the Senate action.

"This legislation contains key elements of the faith-based initiative that I proposed more than two years ago to encourage more charitable giving and rally the armies of compassion that exist in communities all across America," he said.

But administration officials objected to a provision in the bill that would raise funding for social service grants by more than $1.3 billion through next year.

That issue could become a sticking point as the bill moves through Congress.

The Republican-led House, which in 2001 passed a version of the faith-based initiative that closely tracked Bush's goals, has not passed a similar bill this year.

Though stripped of its most contentious elements, the bill the Republican-led Senate approved aims to help charities through new tax breaks, supporters said.

Major new provision

A major new provision would allow individuals who do not itemize deductions to write off up to $250 a year for charitable donations that exceed $250. For example, those who donate $400 could deduct $150 in income.

The provision would expire in January 2005.

Current law allows charitable deductions only for the minority of taxpayers - generally in the upper income brackets - who itemize.

Another provision would allow qualified taxpayers to make charitable donations from Individual Retirement Accounts without incurring taxes or penalties.

Other portions of the bill would provide new tax incentives for charitable donations of food, books and computers.

And the bill includes tax breaks for the sale or donation of undeveloped land to be set aside for conservation.

Sponsors said the costs of the bill in lost tax revenue would be offset by provisions cracking down on corporate tax shelters.

Nick Anderson writes for the Los Angeles Times, a Tribune Publishing newspaper.

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