The bill would give new tax breaks for donating to charity, including religious groups and other causes. Helping to pay for it, the bill would make it more difficult for companies to relocate to offshore tax havens like Bermuda. It would also increase penalties on those who promote and use shelters that are arranged mainly to avoid paying taxes.
The heart of the legislation is based on Bush's ``faith-based initiative,'' and was stripped of its most controversial elements after a bitterly partisan House debate. Key senators indicated there was no consensus for changing the law to open government programs to religious groups. Instead, backers focused on a tax break for charitable giving, which was said to enjoy widespread support.
Most significantly, the legislation would give people who do not itemize on their taxes a break for donations to charity beyond $250 in any one year, up to $500. To keep the cost down, the new tax deduction would expire in two years.
Even this proposal, now before the Finance Committee, has garnered little enthusiasm. Committee Chairman Max Baucus, D-Mont., said this tax deduction was eliminated in 1986 because it didn't work well. "I am concerned that the deduction won't provide much incentive for charitable giving and will make the (tax) code more complex," he said. "Nonetheless, President Bush has made this particular proposal his top priority. In light of that, we should give the proposal a chance."
Many Republicans were even less enthusiastic. Sen. Jon Kyl, R-Ariz., said it "spends too much with regard to any reasonable expectation of benefit" and said the standard tax deduction that all filers get assumes a certain level of charitable giving. "I don't think there's any evidence (that) adding another deduction on top of that is going to enhance the giving," Kyl said.
Sen. Fred Thompson, R-Tenn., said there are "some legitimate concerns" about the provision. And Sen. Craig Thomas, R-Wyo., said he's not sure the change will help the needy.
The committee was scheduled to vote on the measure Thursday but ran out of time and now is expected to approve it sometime next week, said committee spokesman Michael Siegel. It's not clear if it will come up for a vote on the Senate floor. After it leaves the committee, Siegel said, "it's future is uncertain."
Still, the administration said the committee debate was a step forward. "Today is the beginning of a process we've been waiting for," said Jim Towey, director of the White House Office of Faith-Based and Community Initiatives. ``Anything worthwhile is going to require effort."
