[Congressional Record (Bound Edition), Volume 149 (2003), Part 16]
[Extensions of Remarks]
[Page 22755]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          PERSONAL EXPLANATION

                                 ______
                                 

                           HON. CLIFF STEARNS

                               of florida

                    in the house of representatives

                      Tuesday, September 23, 2003

  Mr. STEARNS. Mr. Speaker, I missed the following votes due to 
personal family reasons, Rollcall vote No. 506 (To H.R. 7, Charitable 
Giving Act of 2003)--Had I been present I would have voted ``no.'' 
Rollcall vote No. 507 (To H.R. 7)--Had I been present I would have 
voted ``no.'' Rollcall vote No. 508 (H.R. 7)--Had I been present I 
would have voted ``yes,'' and given the following statement which I now 
include in my extension of remarks.
  Mr. Speaker, I am pleased to support H.R. 7, and am glad to 
especially support the flattening of the excise tax on the net 
investment income for private foundations from a two-tiered tax to a 
single tier of 1 percent. This could be one of the most effective steps 
Congress could take to spur charitable giving.
  Currently, private foundations generally are subject to a 2 percent 
excise tax on their net investment income.
  The tax was originally enacted in the Tax Reform Act of 1969 as a way 
to offset the cost of government audits of these organizations, in the 
wake of some unfortunate--and clearly wrong--mismanagement of 
foundation income. However, excise tax revenues have steadily climbed 
and IRS audits of private foundations have steadily dropped over the 
past decade. Specifically, in 1990, the excise tax raised $204 million 
and the IRS conducted 1,200 audits of private foundations. In 1999, the 
last year for which figures are available, the excise tax raised $499.6 
million with the IRS conducting only 191 audits.
  Congress reduced this tax in 1978 and 1984. In both instances it was 
noted that the adjustments were necessary because the revenues 
collected from the tax exceeded IRS auditing needs. Accordingly, the 
Joint Committee on Taxation recognized in its April 2001 
recommendations the need to repeal this tax. Finally, the tax is 
inequitable, as other tax-exempt organizations are also audited, 
however, private foundations are the only tax-exempt organizations that 
have to fund their own policing.
  Repeal of the excise tax would result in dollar for dollar increase 
in qualifying distributions of hundreds of millions of dollars every 
year, boosting the ability of charitable organizations to address 
national priorities across the range of fields that are the focus of 
some 58,000 private foundations. President Bush has proposed a 
reduction in this excise tax in his FY2004 budget to 1 percent, and for 
that I am quite appreciative. If we went further, though, the 
elimination of this tax would spur additional charitable giving. One of 
the most compelling arguments I've received comes from foundations 
pointing out that the money they would save from a repeal won't benefit 
the foundation officers, trustees, or even any employees. Who will 
benefit from a repeal of the excise tax? The causes for which each 
foundation was created. For example, the William Caspar Graustein 
Memorial Fund in Hamden, Connecticut writes me: ``Congressman 
(Stearns), the William Caspar Graustein Memorial Fund would gain 
nothing from the flattening of this tax. The check we write to the 
United States Treasury we would instead write to our grantees. Our 2002 
excise tax payment was $22,176. We would prefer to put that money to 
work where we know it would help--the children and families in 
Connecticut.'' Signed, David M. Nee, Executive Director.
  Foundations often spring from a corporate beginning. Take Robert W. 
Woodruff, the President of The Coca-Cola Company from 1923 until his 
death in 1985. He transformed the fledgling soft drink enterprise and 
its bottler franchise system into a corporate giant with the world's 
most widely known trademark. But this was not enough. Mr. Woodruff 
established a remarkable record as a businessman and philanthropist. 
Mr. Woodruff gave anonymously to many institutions, a number of which 
owe their very existence to his generosity. Prominent on Mr. Woodruff's 
desk was his personal creed: ``There is no limit to what a man can do 
or where he can go if he doesn't mind who gets the credit.'' Last year, 
the Robert W. Woodruff Foundation, Inc. in Atlanta, Georgia, donated 
more than $106 million to aid schools, health care, art and cultural 
activities and the conservation of natural resources.
  In my state, The Blue Foundation for a Healthy Florida, the 
philanthropic arm of Blue Cross and Blue Shield of Florida, serves to 
positively impact Florida's many different health care challenges. This 
includes a focus on the uninsured and underserved. The Blue Foundation 
provides aid to charities across the state that provide outreach and 
care to the underserved and uninsured population, as well as address 
other pressing health care needs.
  This nation was founded on a principle of helping hands, charity, 
volunteerism, and the free flow of aid and comfort to fellow Americans. 
The grace of giving where one wants to is one of our precious 
liberties. Foundations touch the lives of every American--from access 
to public libraries, development of the polio vaccine, and even leading 
in the creation of Emergency 911. Let us encourage this and let 
charitable works thrive.

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