[Congressional Record Volume 147, Number 116 (Monday, September 10, 2001)]
[Senate]
[Pages S9258-S9259]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself, Mr. Baucus, and Mr. Dodd):
  S. 1415. A bill to amend the Internal Revenue Code of 1986 to enhance 
book donations and literacy; to the Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce legislation 
designed to clarify and enhance the charitable contribution tax 
deduction for donations of excess book inventory for educational 
purposes. I am pleased to be joined in this effort by my good friends 
and colleagues Senators Baucus and Dodd. This proposal would simplify a 
complex area of the current law and eliminate significant roadblocks 
that now stand in the way of corporations with excess book inventory to 
donating those books to schools, libraries, and literacy programs, 
where they are much needed.
  Unfortunately, our current tax law contains a major flaw when it 
comes to the donation of books that are excess inventory for publishers 
or booksellers. The tax benefits for donating such books to schools or 
libraries are often no greater than those of sending the books to the 
landfill. And, since it is generally cheaper and faster for a company 
to simply send the books to the dump, rather than go through the 
trouble and cost of finding donees, and of packing, storing, and 
shipping the books, it often ends up being more cost effective and 
easier for companies to truck the books to a landfill or recycling 
center.
  While there are provisions in the current law where a larger 
deduction is available for the donation of excess books, many companies 
have found that the complexity and uncertainty of dealing with the 
requirements, regulations, and possible Internal Revenue Service 
challenges of the higher deduction serve as a real disincentive to 
making a contribution.
  This is a sad situation, when one considers that many, if not most, 
of these books would be warmly welcomed by schools, libraries, and 
literacy programs.
  The heart of the problem is that under the current law, the higher 
deduction requires that the donated books be used only for the care of 
the needy, the sick, or infants. This requirement makes it difficult 
for schools to qualify as donees and also frequently prohibits 
libraries and adult literacy programs from receiving such deductions. 
This is because these schools, libraries, and literacy programs often 
serve those who are not needy or are over the age of 18. Further 
complicating the issue, the valuation of donated book inventory has 
been the subject of ongoing disputes between taxpayers and the IRS. The 
tax code should not contain obstacles that provide disincentives to 
charitable donations of books that can enhance learning.

  The bill we are introducing today addresses the obstacles of donating 
excess book inventory by providing a simple and clear rule whereby any 
donation of book inventory to a qualified school, library, or literacy 
program is eligible for the enhanced deduction. This means that 
booksellers and publishers would receive a higher tax benefit for 
donating the books rather than throwing them away and would thus be 
encouraged to go to the extra trouble and expense of seeking out 
qualified donees and making the contributions.
  My home State of Utah, like the rest of the Nation, has a problem 
with illiteracy. According to the National Institute for Literacy, 
between 21 and 23 percent of the adult population of the United States, 
about 44 million people, are only at Level 1 literacy, meaning they can 
read a little but not well enough to fill out an application, read a 
food label, or read a simple story to a child. Another 25 to 28 percent 
of the adult population, or between 45 and 50 million people, are 
estimated to be at Level 2 literacy, meaning they can usually can 
perform more complex tasks such as comparing, contrasting, or 
integrating pieces of information but usually not higher level reading 
and problem-solving skills. Literacy experts tell us that adults with 
skills at Levels 1 and 2 lack a sufficient foundation of basic skills 
to function successfully in our society.
  While this bill is not a cure-all for the tragedy of illiteracy, it 
will increase access to books, both for adults and for children. Our 
tax code should not encourage the destruction of perfectly good books 
while schools, libraries, and literacy programs go begging for them.
  The Senate is already on record in unanimous support of this bill. 
During the floor debate on the Economic Growth and Tax Relief 
Reconciliation Act of 2001, I offered this proposal as an amendment, 
which was accepted without opposition. Unfortunately, the provision was 
dropped in the conference with the House.
  The Joint Committee on Taxation estimates this provision to decrease 
revenues to the Treasury by $246 million over a ten year period. This 
estimate helps demonstrate the extent of the value of the books that 
are currently being discarded that could be utilized to help America's 
adults and children.
  I hope our colleagues will join us in supporting this bill. It is 
wrong for our

[[Page S9259]]

tax code to encourage book publishers to send books to the landfill 
instead of to the library. Let's correct this problem.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1415

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. CONTRIBUTIONS OF BOOK INVENTORY.

       (a) In General.--Section 170(e)(3) of the Internal Revenue 
     Code of 1986 (relating to certain contributions of ordinary 
     income and capital gain property) is amended by adding at the 
     end the following new subparagraph:
       ``(D) Special rule for contributions of book inventory for 
     educational purposes.--
       ``(i) Contributions of book inventory.--In determining 
     whether a qualified book contribution is a qualified 
     contribution, subparagraph (A) shall be applied without 
     regard to whether or not--

       ``(I) the donee is an organization described in the matter 
     preceding clause (i) of subparagraph (A), and
       ``(II) the property is to be used by the donee solely for 
     the care of the ill, the needy, or infants.

       ``(ii) Qualified book contribution.--For purposes of this 
     paragraph, the term `qualified book contribution' means a 
     charitable contribution of books, but only if the 
     contribution is to an organization--

       ``(I) described in subclause (I) or (III) of paragraph 
     (6)(B)(i), or
       ``(II) described in section 501(c)(3) and exempt from tax 
     under section 501(a) which is organized primarily to make 
     books available to the general public at no cost or to 
     operate a literacy program.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after the date of the 
     enactment of this Act.

  Mr. DODD. Mr. President, I rise with my colleagues Senator Hatch and 
Senator Baucus to introduce a measure to encourage book publishers to 
donate excess inventory to schools, libraries, and literacy programs.
  Currently, because of the TAX CODE's treatment of such donations, and 
the cost of shipping books to schools and libraries, often it is more 
economical for publishers to destroy books than to donate them. That is 
as shocking as it is unacceptable.
  Both the House and Senate versions of the education bills that 
currently are in conference authorize nearly $1 billion dollars for 
grants to State and local educational agencies for pre-reading or 
reading programs for children from pre-kindergarten through 3rd grade. 
I think it goes without saying that programs to teach kids to read 
won't work unless they can provide kids with access to books. You can't 
learn to read if you don't have anything to read.
  That is why measures such as this, and the provision in the Senate's 
education bill to help school libraries acquire up-to-date books and to 
remain open for longer hours, are essential to the success of the 
reading programs in both bills. This provision will increase children's 
access to books, introduce them to whole new worlds of knowledge, and 
enable them to read more at school, in libraries, and at home.
  This is important, because in a recent study of 15 countries, the 
United States was 12th in the percentage of 13- year-olds who read for 
fun. Of course, reading for fun is valuable for its own sake, but it 
also is an important indicator of academic achievement. For example, 
students who read on their own do better on both math and reading 
tests.
  So, I believe that this provision is exactly the sort of good 
bipartisan tax and public policy that we ought to be promoting in the 
Senate, and I ask my colleagues to join Senators Hatch, Baucus, and 
myself in supporting this bill.

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