Senate Floor Speech
Senator Kay Bailey Hutchison
January 23, 2003 -- Page: S1483

MRS. HUTCHISON. Mr. President, I am pleased to introduce legislation today that will enhance and encourage charitable giving in the United States. The Charitable IRA Rollover Act will allow individuals to rollover assets from an Individual Retirement Account, or "IRA,'' to a charity without incurring income tax consequences.

One of my priorities has been to promote charitable giving and expand the role charities and faith-based institutions play in addressing social problems in the United States. I hope this legislation moves us further in that direction.

Government alone cannot solve society's most serious problems. In fact, government social programs often fail in their missions. The old welfare system is a perfect example of what often goes wrong when government tends to throw money at a problem.

Under the old system, while trying to help people, government actually encouraged them to stay on welfare. It encouraged out-of-wedlock births and discouraged fathers from living at home. Many of these unintended consequences were addressed with the welfare reform bill, which will be reauthorized this year. The success of these reforms are evident in welfare rolls, which have now dropped by half across the United States.

But government is not the solution. Charities change hearts and lives and have a superior track record to the government in tackling social ills.

America's top charities address a broad range of problems. From the Salvation Army to the Boys and Girls Clubs, and the American Cancer Society to the Red Cross, each plays a role in improving America's health, education and welfare. Their success has been documented. It has been demonstrated that mentors in the Big Brothers/Big Sisters program can cut drug abuse by 50 percent.

Charitable giving is an American tradition. Americans appreciate the role of charities and are actively involved in many philanthropic causes. Nearly half of all Americans volunteer in some capacity on a regular basis, including nearly 25 percent of Americans who are active volunteers in religious affiliated organizations. That is why it is logical to use faith-based organizations as a means of accomplishing objectives which can be more personal and tailored to the individual in need.

The legislation I am introducing today helps these organizations by making it easier for people to make charitable contributions. Individuals age 59 1/2 and older will be able to move assets without penalty from an IRA directly to a charity or into a qualifying deferred charitable gift plan, such as a charitable remainder trust, pooled income fund or gift annuity. Current law requires taxpayers to first withdraw the IRA proceeds and pay taxes on them before contributing the remaining funds to a charity. While current law allows taxes on the withdrawal to be offset somewhat by the current charitable deduction, this ability is limited.

Americans currently hold more than $2 trillion in assets in IRAs, and nearly 40 percent of American households have IRAs. This bill would allow senior citizens who have provided well for their retirement to transfer IRA funds to charities without the government taking a slice. This will cut bureaucratic obstacles and disincentives to charitable giving and unlock a substantial amount of new funds that could flow to America's charitable organizations.

The time for promoting charitable giving has come.

This proposal benefits everyone involved. Individuals will be able to give more of their savings to charities of importance to them. Charities will benefit from increased philanthropy, enabling them to continue their important work. Those needing help will have increased access to services from these charities. And the government will have to take care of fewer of those in need as charities are better able to assume that burden.

This is not a partisan proposal. It is a common sense way to remove obstacles to charitable giving. Senators DURBIN and LEVIN are original co-sponsors of this legislation. I look forward to working with them, the White House and many other colleagues to pass this bill. I hope the Senate will join in this effort to provide a valuable source of philanthropy for our nation's charities.