[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Extensions of Remarks]
[Pages 2522-2523]
[From the U.S. Government Publishing Office, www.gpo.gov]



        IN SUPPORT OF THE IRA CHARITABLE ROLLOVER INCENTIVE ACT

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                      Wednesday, February 28, 2001

  Mr. CRANE. Mr. Speaker, today I am introducing legislation entitled 
the ``IRA Charitable Rollover Incentive Act of 2001''. This is one of 
three bills I am introducing today to correct certain peculiarities in 
the tax code that discourage charitable giving. I introduced a similar 
bill in the 106th Congress, which garnered

[[Page 2523]]

125 co-sponsors. The essence of this bill was included in the tax bill 
vetoed by President Clinton in 1999 and was included again in the 
pension reform bill that passed last year.
  This legislation would allow individuals age 59\1/2\ or older to 
contribute amounts currently held in Individual Retirement Accounts 
(IRAs) directly to qualified charities without having to first 
recognize the income for tax purposes and then take a charitable 
deduction. This legislation will give individuals more freedom to 
allocate their resources as they see fit while providing badly needed 
resources to churches, colleges and universities, and other social 
organizations.
  All IRA withdrawals are generally taxed as ordinary income. 
Currently, individuals may withdraw funds from an IRA without incurring 
an early withdrawal penalty once they reach age 59\1/2\. Under so-
called minimum distribution rules, an individual must begin making 
withdrawals by April 1st following the year he or she reaches age 70\1/
2\. The IRA was intended to encourage individuals to save for 
retirement, but due to the strong economy in recent years and the 
general increase in asset values, many individuals have more than 
sufficient funds to retire comfortably. Thus it is a common practice 
for retirees to transfer some of their wealth to charities and, in some 
cases, that wealth is held in an IRA.
  If our tax code were not so laden with peculiarities and oddities, 
this legislation would not be needed. A taxpayer could readily 
recognize the income for tax purposes and take a charitable deduction. 
Unfortunately, in many cases under current law such a simple 
arrangement results in a loss of some portion of the charitable 
deduction. For example, charitable contributions are subject to the 
itemized deduction ``haircut'' under which certain taxpayers lose a 
portion of their charitable deduction. I have introduced separate 
legislation to address this problem.
  Another problem results when a donation exceeds 50 percent of the 
taxpayer's adjusted gross income--30 percent if the gift is to a 
private foundation. In this case the taxpayer cannot take the full 
deduction immediately; it must be spread over a period of years. Given 
the time value of money, delaying the timing of the deduction means the 
taxpayer can only effectively deduct a fraction of the value of the 
total gift.
  It is impossible to know how much capital is trapped by the current 
rollover rules and thus unavailable to our nation's charities. 
According to one report, there is over $1 trillion held in IRA 
accounts. If only I percent of this would be donated to charity but for 
the tax problems associated with charitable rollovers, this represents 
a $10 billion loss of resources to these organizations that do so much 
good.
  This is sound legislation that has consistently received strong bi-
partisan support. I hope we can finally see its enactment in 2001.
  Charity benefits both the giver and the receiver in like proportions. 
The act of giving elevates the heart of the giver. The act of receiving 
elevates the condition of the recipient. Charity is thus a blessed act 
that should suffer no discouragement from something so mean as the tax 
code.

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