REPEALING THE TAX ON CHARITY
Americans are the most charitable people in the world. Every day, countless thousands of people at home and abroad are fed, clothed, housed and receive life-saving medical treatment as a result of this nation's philanthropic efforts. The average American family contributes more than $800 a year to charitable causes.
I believe government should do whatever it can to encourage the continuation of these good works, and I think most Texans feel the same.
Consider one couple in Euless who want to donate money to their alma mater: Baylor University in Waco. When they were young, they began saving for their retirement. They did very well, and now find they have more than enough retirement savings to meet their needs. They would like to use some money they have set aside in an Individual Retirement Account to set up a scholarship program at Baylor. But they don't want to pay the substantial tax bite that would be due if they cash out their IRA. The tax situation has them stymied.
There should be a way to encourage such philanthropy.
On May 20 I introduced legislation to do that by making giving less taxing. The Charitable IRA Rollover Act will allow donors to transfer assets they have in an IRA to a charity without having to pay taxes on their withdrawal first.
My bill would allow these generous individuals to direct their personal resources to charitable causes penalty-free. This would unlock an important source of charitable giving. And it would allow donors to give back to their communities without Uncle Sam jumping in and taking a cut.
Here's how it would work: A person who has reached age 59 ½ will be allowed to move assets from an IRA directly to charity or into a qualifying deferred charitable gift plan without being liable for taxes on the transfer funds.
This bill could provide a valuable new stream of philanthropy for our nation's charities. Current law takes as much as 38 percent of the gift out in taxes. My legislation will encourage America's best charitable instincts.
Recent studies show that retirement plan assets comprise a substantial part of the net worth of many individuals. For these people, these assets represent the main source of funds from which they can make deferred charitable gifts.
My legislation has been endorsed by the American Red Cross, the American Association of Universities, the American Council on Education, American Association of Museums, the American Institute for Cancer Research and 200 other charitable organizations in the United States.
The additional giving encouraged by the Charitable IRA Rollover Act would support increased public services through the nonprofit sector. As we balance the federal budget in Washington and reduce the size of government, we're encouraging private charitable organizations to do even more to assist the less fortunate in society because we believe private charities do that better than the federal government. My bill will help those charities attract the resources they need to do what we've asked of them.
May 21, 1999