[Congressional Record Volume 147, Number 12 (Tuesday, January 30, 2001)]
[Senate]
[Pages S709-S710]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. HUTCHISON (for himself, Mr. Durbin, and Mr. Levin):
  S. 205. A bill to amend the Internal Revenue Code of 1986 to waive 
the income inclusion on a distribution from an individual retirement 
account to the extent that the distribution is contributed for 
charitable purposes; to the Committee on Finance.
  Mrs. HUTCHISON. Mr. President, today I rise to introduce legislation 
that will enhance and encourage charitable contributions in the United 
States.
  As many know, this week, the President is set to unveil a number of 
initiatives to promote charitable giving and to expand the role that 
charities and faith-based institutions play in attacking social 
problems in the United States.
  Government alone is incapable of solving society's most vexing 
problems. In fact, government programs often fail in their missions. 
The old welfare system is a perfect example of what often goes wrong. 
Under the old system, we encouraged people to stay on welfare. We 
encouraged out-of-wedlock births. We encouraged fathers to live out of 
the home. We ended this with our welfare reform bill. Welfare rolls 
have now dropped by half across the United States.
  The track record of charitable organizations have been far superior 
than the government's in tackling social ills. America's top charities 
cover a broad range of problems, from the Salvation Army to the YMCA, 
and the American Cancer Society to the Red Cross. Each is playing a 
role in improving America's health, education and welfare. How 
successful can they be? It has been known that mentors in the Big 
Brothers/Big Sisters program can cut drug abuse by 50 percent.
  Americans appreciate the role of these groups. They are actively 
involved in charitable causes. Nearly half of all Americans volunteer 
in some capacity on a regular basis.
  Nearly 25 percent of all Americans are active in their religion on a 
volunteer basis. This is why it is so logical to use faith-based 
organizations as means of accomplishing objectives at which the 
government has failed. The Chicago Tribune recently noted that 
``churches, temples and prayer halls cannot replace the mammoth task of 
helping the needy. But, they do a better and more efficient job of 
understanding their communities and meeting the need of their 
citizens.''
  The legislation I am introducing today will make it easier for 
charitable contributions to the made and for charitable organizations 
to pursue their missions. Under this bill, individuals age 59\1/2\ and 
older will be able to move assets penalty-free 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, pay the 
taxes due and then contribute the funds to a charity. Taxes can be 
offset by the current charitable deduction, but only to an extent.
  Americans currently hold well over $1 trillion in assets in IRAs, and 
nearly half of America's families have IRAs. This bill will allow 
senior citizens who have provided for their retirement--but find that 
they do not need their entire IRA for living expenses--to transfer IRA 
funds to charity without dilution. This will cut bureaucratic obstacles 
to charitable giving and unlock a substantial amount of new funds that 
could flow to America's charitable organizations.
  I first introduced this legislation in 1998, and it was folded into 
our tax bill

[[Page S710]]

in 1999. Regrettably, it was vetoed by the President. But, given our 
new leadership in the White House, this is an idea whose times has 
come. In fact, President Bush made this part of his tax plan when it 
was unveiled in 1999.
  This is also not a partisan proposal. Senator Durbin was an original 
co-sponsor of this legislation. I look forward to working with him, and 
the White House on this bill. It also has the support of numerous 
universities and charitable groups, including the Charitable Accord and 
the Council of Foundations, two umbrella organizations representing 
more than 2,000 organizations and associations.
  Mr. DURBIN. Mr. President, I am pleased to introduce, along with 
Senator Kay Bailey Hutchison, the charitable IRA Rollover Act of 2001. 
We introduced this legislation in the last Congress. While it was 
included in last year's year-end tax bill, our provision was 
unfortunately stripped out at the last minute Senator Hutchison and I 
sincerely hope that this legislation will become law this year.
  The IRA Charitable Rollover Act has the support of numerous 
charitable organizations across the United States. The effect of this 
bill would be to unlock billions of dollars in savings Americans hold 
and make them available to charities. Our legislation will allow 
individuals to roll assets from an Individual Retirement Account (IRA) 
into a charity or a deferred charitable gift plan without incurring any 
income tax consequences. Thus, the donation would be made to charity 
without every withdrawing it as income and paying tax on it.
  Americans currently hold well over $1 trillion in assets in IRAs. 
Nearly half of America's families have IRAs. Recent studies show that 
assets of qualified retirement plans comprise a substantial part of the 
net worth of many persons. Many of these individuals would like to give 
a portion of these assets to charity.
  Under our current law, if an IRA is transferred into a charitable 
remainder trust, donors are required to recognize that as income. 
Therefore, absent the changes called for in the legislation, the donor 
will have taxable income in the year the gift is funded. This is a huge 
disincentive contained in our complicated and burdensome tax code. This 
legislation will unleash a critical source of funding for our nation's 
charities. This legislation will provide millions of Americans with a 
common sense way to remove obstacles to private charitable giving.
  Under the Hutchison-Durbin plan, an individual, upon reaching age 
59\1/2\, could move assets penalty-free from an IRA directly to charity 
or into a qualifying deferred charitable gift plan--e.g. charitable 
remainder trusts, pooled income funds and gift annuities. In the latter 
case the donor would be able to receive an income stream from the 
retirement plan assets, which would be taxed according to normal rules. 
Upon the death of the individual, the remainder would be transferred to 
charity.
  There are numerous supporters of this legislation including 
Georgetown University, the Art Institute of Chicago, the University of 
Chicago, the Field Museum, the Catholic Diocese of Peoria, Northwestern 
University, the Chicago Symphony Orchestra, and others. There are over 
100 groups in Illinois alone that support this sensible legislation.
  I hope the Senate will join in this bi-partisan effort to provide a 
valuable new source of philanthropy for our nation's charities. I hope 
that our colleagues will co-sponsor this important piece of legislation 
and that it will be enacted into law this year. I thank the Senator 
from Texas, Senator Hutchison, for working with me and my staff in this 
effort.
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