House Passes Philanthropy Bill That’s DOA In The Senate

February 12, 2015       Patrick Sullivan      

The U.S. House of Representatives today passed the package of tax incentives known as the America Gives More Act, H.R. 644, by a vote of 279 to 137. All Republicans but one voted for the bill, as well as 39 Democrats. While the bill passed, it fell short of the 290-vote super majority needed to avoid a presidential veto.

Four bills were packaged as one and called H.R. 644. These bills include:

  • H.R. 637: would allow people age 70 ½ or older to donate up to $100,000 to charity directly from their IRAs without incurring a tax on the withdrawal. This provision expired on Jan. 1.
  • H.R. 640, would modify the tax rate for excise tax on the investment income of private foundations from 2 percent to 1 percent in any year in which its distributions for charitable purposes exceeds the average level of its distributions over the preceding five tax years. Private foundations must determine each year whether to calculate a 1 or 2 percent excise tax. The bill would remove the calculations and simplify the excise tax as 1 percent on investment income, regardless of giving levels.
  • H.R. 641, Conservation Easement Incentive Act of 2015, sponsored by Mike Kelly (R-Pa.), would allow property owners to reduce their taxable income by giving up development rights to property for purposes of preserving natural resources.
  • H.R. 644 would permanently extend and expand the charitable deductions for contributions of food inventory and land conservation easements, increasing from 10 to 15 percent of taxpayer aggregate net income the amount of deductible food inventory contributions, which a taxpayer may make in a taxable year, and set forth rules for determining the basis of contributed food for taxpayers other than C corporations, and the fair market value of the food.

“We’re talking about extending tax breaks that have routinely been extended for years,” said Rep. Tom Cole (R-Okla.) during the debate before the vote. “We’re simply saying let’s make sure that people who have a benefit know and can calculate and make business decisions early in the year instead of scrambling at the end.”

The next step would be for the bill to go to the U.S. Senate, but the senate leaders have said it will not take up the bill. Instead, the senate will focus on comprehensive tax reform, according to David L. Thompson, vice president of public policy at the National Council of Nonprofits in Washington, D.C.

Democrats’ objections were two fold, said Thompson. First, they wanted the tax incentives offset with either tax hikes or spending cuts elsewhere. Second, they believe tax reform should be holistic instead of piecemeal.

“No one questioned the language,” said Thompson. “My optimistic view is, there will obviously be give and take on comprehensive reform, but the easiest and most rational thing to do with charitable tax provisions is this language will go in. We’ll have to fight for it, but I’d say this is now the comprehensive tax reform language (for charitable tax incentives).”

Added Steve Taylor, senior vice president for public policy at the Alexandria, Va.-based United Way Worldwide: “When you listen to the debate about these bills on their merits, it is clear there is overwhelming support for the work of charities on both sides of the aisle. This legislation has forced members of Congress to think about charities and the work charities do, and for many of them to articulate a position on that. Not surprisingly, most of them concluded that charities do important work in this country.”