Senate Allows New Tax Cuts for Charitable Giving

The Senate passed legislation Wednesday granting new tax breaks for charitable donations after abandoning more ambitious efforts pushed by President Bush to boost religious groups.

The "faith-based initiative" began as an effort to open government programs to churches, synagogues and other religious organizations, but that proved so contentious that backers dropped every one of these provisions from the bill.

The revised bill was approved 95-5.

It simply provides tax breaks for donations to charities and offers new technical assistance for small groups that want to offer social services. It also provides $1.3 billion more over two years for the Social Services Block Grant, a favorite of Democrats.

The White House said it supports the bill overall but objects to the increased money for the social services program.

The vote came after more than two years of sometimes angry debate in Congress about the role of religious groups using tax dollars. Sen. Joe Lieberman, D-Conn., one of the lead sponsors, said he was "proud and in some sense relieved" to arrive at the vote.

"This began as an attempt to give support to faith-based groups that perform good works," Lieberman said. "It no longer contains any provisions targeted specifically at carving out a large or lawful space for faith-based groups in our social services."

Sen. Rick Santorum, R-Pa., the other lead sponsor, said the bill would encourage charitable giving and therefore support religious groups, as well as secular ones, that will receive more contributions.

"It's really a great day for those who have been working hard, committing their lives in some of the most difficult neighborhoods of this country," Santorum said. "We're going to be getting those resources that are much needed to those grass roots organizations."

Santorum also argued that the Bush administration has succeeded in rewriting government regulations to open programs to religious groups, making legislation less urgent.

Still, the White House vowed to keep pushing for legislation, and Santorum promised to revisit the issue when a bill renewing the welfare program comes to the floor later this year.

For now, backers said House Republicans have agreed to go along with the stripped-down bill.

The Senate dismissed an amendment backed by Sen. Don Nickles, R-Okla., to give people who sell land for conservation a break on capital gains. That vote was 62-38.

That was the only amendment considered, with other objections to the bill dismissed after the controversial parts were stripped.

The initiative, at the center of Bush's "compassionate conservative" agenda, met stiff opposition from the start.

Backers argued that people looking for social services should be able to choose religious providers if they want to. Opponents worried about discrimination against people based on religion and feared the wall between church and state was crumbling.

A divided House approved Bush-backed legislation opening a dozen new social programs to religious groups. It allowed these groups to hire or fire based on their religion, and allowed them to skirt state anti-discrimination laws.

The bill was strongly opposed by civil rights groups and others, and when it got to the Senate, Santorum and Lieberman scaled it back.

Their bill initially offered tax breaks and made it clear that religious groups may not be excluded from government contracts for reasons such as having a religious name or displaying religious symbols.

Still, critics objected. Unable to overcome these objections, backers stripped the contested language altogether.

Most significantly, the remaining 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.

The bill also gives tax breaks for corporate donations, allows tax-free donations from Individual Retirement Accounts and encourages banks to offer Individual Development Accounts, which match the savings of low-income people

It provides $150 million for a new fund to help small charities, including religious groups, expand their programs.