The on-again off-again mark-up of the Charity Aid, Recovery and Empowerment Act (CARE) (S. 1924), which is Sens. Joe Lieberman (D-CT) and Rick Santorum’s (R-PA) faith-based and charitable giving bill, looks like it will finally happen on Thursday, June 13 in the Senate Finance Committee. If it does go to mark-up, everyone is waiting with bated breath to find out what will be in the bill. Both the need for and cost of tax breaks for the tax provisions, such as for charitable giving, came under question in a June 4 closed discussion between members of the Senate Finance Committee, causing additional delay in Committee consideration of the CARE Act. Committee Chair Max Baucus (D-MT) proposed modifications to the tax incentives in the bill, including:

• A nonitemizer deduction with a floor of $250 and a ceiling of $500 for individuals ($500/$1000 for joint filers), costing $2.7 billion over 2 years. This means an individual who does not itemize his or her taxes must give more than $250 before the tax break kicks in and can get the deduction on giving of up to $500. The maximum deduction for someone in the 28% tax bracket would be $70 for the year. (The nonitemizer deduction was originally a ceiling of $400 per person);
• Contributions from rollover of Individual Retirement Accounts at age 59½ for planned giving and at age 70 for direct donations, costing $3 billion over 10 years;
• Credits for matched Individual Development Accounts for low-income households, costing $500 million over 10 years.

The bill also has a $1.1 billion increase in funding for the Social Services Block Grant program and funding for the Compassion Capital Fund. Sens. Kent Conrad (D-ND) and Olympia Snowe (R-ME) wanted assurances that the roughly $8 billion tax bill would be paid for through offsets in other revenue sources. Proposed offsets would only cover $3.7 billion of the $8 billion cost over ten years. The committee did not discuss the non-tax portions of the bill, relating to grant rules for faith-based organizations. Ranking Finance Committee member Charles Grassley (R-IA) emphasized the need for the President to contact committee members to push the bill. If consensus does not emerge soon the committee could take up other issues, leaving the CARE Act in limbo. On June 10 a bipartisan coalition of 20 Senators, including Lieberman and Santorum, wrote Baucus urging immediate action on the bill, before the Committee takes up "more complicated and contentious pieces of legislation." Even though the broad outline of the bill has been discussed, it is subject to change, and the details on the other provisions are still being negotiated. For example, some members found the 2-year authorization of the nonitemizer deduction as too much of a gimmick. At the same time, they recognize that it would be difficult to pay for the roughly $15 billion it would cost over 10 years. The original bill also had a provision to lower the foundation excise tax to a flat 1 percent. While much of the foundation community supports the provision, at least one Committee staffer wants to insert language that would increase foundation giving in return, basically having the net effect of increasing foundation payout rates. This is strongly opposed by some powerful foundations, leaving it unclear what will happen to the excise tax provision. According to insiders, the excise tax provision was not part of the Baucus draft from last week.