Fighting Hunger Incentive Act of 2015by Representative Erik Paulsen
Posted on 2015-02-12
PAULSEN. I thank the chairman for his leadership on leading the
effort to simplify the Tax Code and give some confidence and certainty
to those who use it.
Mr. Speaker, I rise in support of this legislation, the America Gives More Act. This legislation is absolutely about helping those who are most in need. Those are our charities and our foundations across the country, which are working day in and day out to help those who are most in need.
There are a number of important tax rules that we have already discussed that are governing charitable donations and charitable organizations, but they have always been temporary. We have already had these provisions in law, and they have already expired, so here we are, acting under retroactivity already. It is time to get rid of these short-term fixes and embrace long-term solutions. This legislation simply makes the provisions permanent.
It encourages companies to donate food to help feed the hungry. It makes it easier for individuals who might want to use their money in their IRA retirement funds and give that money to charitable organizations to help others of all varieties. It incentivizes landowners to help protect and preserve our environment for future generations through conservation easements.
I want to just address one other provision that is in this bill, which I actually authored with my colleague, Mr. Davis of Illinois, to help simplify the Tax Code for private foundations. He has been a very strong advocate in leading this effort.
I think we would all agree that private foundations make a world of difference in our communities. We all have them in our States. I know, in Minnesota, we have 1,400 different foundations that donate about $1 billion annually to all of those who are in need. Across the country, there is something like 86,000 foundations that give tens and tens and tens of billions of dollars. Now, these are really impressive figures, but the truth is those figures could actually be a lot higher, and here is why.
The foundation community has come to us, and they are telling us that the Tax Code is discouraging them from actually giving large donations. Today, these institutions face a really complex, cumbersome, two-tiered system of taxation that requires them to pay either a 1 percent or a 2 percent excise tax on their investment income, but in order to qualify for the low rate in any given year, they have got to go and donate an amount greater than the average of their 5-year rolling average from the previous 5 years.
This, actually, creates a very perverse disincentive for these foundations to not make any donations of large amounts in times when we might have a natural disaster, when there are economic tough times. Absolutely now, this is because a large donation in [[Page H1007]] these times would significantly increase a private foundation's 5-year average and make it difficult for them to actually qualify for the lower rate. It also makes sure that they are not going to get the low rate for the next 4 years. We are eliminating this disincentive by replacing a very complicated, two-tiered system with a simple, flat, 1 percent excise tax on all private foundation investment income.
It is important to simplify the tax planning process especially for smaller foundations, because they are the ones who are spending money on accountants and lawyers to navigate the Tax Code when those are valuable resources that could actually be used to help give grants to others who need those resources. This bill simply makes sure that charitable giving decisions are going to be based not on the Tax Code but on the needs of our communities.
The bottom line is: every dollar that these organizations are paying in taxes is one less dollar that they are giving to those who truly need it. I ask my colleagues to join in supporting this legislation.