WASHINGTON -- Seeking to aid charities as part of national welfare reform, Republican lawmakers yesterday introduced legislation that would encourage people to donate more to charities that help the poor.
The proposal, which drew mixed reviews, would allow taxpayers to take a tax credit of up to $100 for donations to charities. But to pay for the tax break, the bill would scale back the Earned Income Tax Credit (EITC) program, a federal program that helps the working poor.
"It's basically taking assistance away from the working poor to try a new approach to helping the poor," said Isaac Shapiro, associate director at the Center on Budget and Policy Priorities, a research group that advocates low-income causes and tracks the budgeting process on Capitol Hill.
Scaling back the EITC, Mr. Shapiro said, "would be a substantial tax increase on millions of poor working families. You'd think they'd find another way to do it."
Sponsors of the bill see it differently. "For decades, billions of tax dollars have been spent by the government in a war on poverty that has failed," said Sen. Rick Santorum, R-Pa., sponsor of the "Choice in Welfare Tax Credit Bill."
A House version is being sponsored by Reps. Jim Kolbe, R-Ariz., and Joe Knollenberg, R-Mich.
"It's time that we provide incentives to individuals who would rather have their hard-earned dollars go to proven anti-poverty efforts based in their communities, not to the government-run welfare bureaucracy that is out of touch," Mr. Santorum said.
Mr. Santorum's legislation would allow taxpayers to get a dollar-for-dollar tax credit of up to $100 ($200 for joint filers) to any qualified private charity engaged in anti-poverty efforts.
Any contributions above the $100 limit would be deductible from income as they are now.
Unlike the current tax deductions for donations, taxpayers wouldn't have to itemize their claims to get the new tax credit. To be eligible, a charitable organization would have to engage in activities aimed at assisting people who earn 150 percent or less of the poverty line.
"This bill will open the doors of funding and support to the most effective, yet least recognized agents of community revitalization programs designed, implemented and staffed by residents of the neighborhoods they serve," said Robert L. Woodson Sr., president of the National Center of Neighborhood Enterprise, a 15-year old organization that assists low income Americans across the country.
In 1994, charitable giving increased 3.6 percent to a total of $130 billion.
It is estimated that 88 percent of that amount is given by individuals, 7.6 percent by foundations and 4.7 percent by corporations, according to the Trust for Philanthropy.