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Jewish Charities Disappointed by Surprise Omission from Tax Bill

June 6, 2001
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Jewish charitable organizations are not going to get the help they were hoping for in the new tax bill, as the final version leaves out a proposal that might have boosted giving by billions of dollars.

The bill, which was scheduled to be signed by President Bush on Wednesday, grabbed headlines for its tax cuts and $1.35 trillion figure. But Jewish groups were surprised and dismayed that a plan to let people who do not itemize their tax returns deduct their charitable contributions was left out in last-minute negotiations.

“To say that we are disappointed is probably an understatement,” said Diana Aviv, vice president of public policy for United Jewish Communities, the Jewish community’s central fund-raising and social services agency.

“We thought the issue was dear to the president’s heart,” she said.

The White House’s larger faith-based initiative has always included a plan to expand the federal charitable deduction to 80 million nonitemizers.

In a speech on May 20, Bush was still touting that plan.

“My attitude is, everyone in America–whether they are well-off or not–should have the same incentive and reward for giving,” Bush said.

But administration officials negotiating with Congress over the tax bill did not make it a top priority. They fought for other provisions in the tax bill — such as tax rate and marriage penalty reductions and eliminating the estate tax — and did not put in the nonitemizing provision.

The proposal was thought to potentially encourage almost $15 billion a year in new charitable giving. It is unclear how much Jewish charities would have benefited.

The White House says the president is hopeful the proposal will work as part of the larger faith-based initiative, which is still in its working stages. An official at the Office of Faith-Based and Community Initiatives said the nonitemizing plan was never intended to be included in the tax bill.

But Jewish groups, which had universally supported the proposal, see the failure to include the provision in the tax bill as the likely end for the idea.

“The tax bill is where you do tax policy,” said Hannah Rosenthal, executive director of the Jewish Council for Public Affairs.

Rosenthal said the proposal could have been used to reach out to younger people, get more nongivers to participate and change the culture of charitable giving in the country.

It remains to be seen whether the nonitemizing proposal will help expand the base of support for the more controversial points of the faith-based initiative.

Congress plans to hold its hearings this week on one of the most controversial points of the administration’s initiative, charitable choice, which allows religious institutions to bid for government contracts to provide social services.

One issue of particular interest to the Jewish community that did make it into the tax bill was the expansion of education IRAs, or education savings accounts. For the first time, parents will be allowed to use the tax benefit of the savings account to go toward tuition at private and parochial elementary and secondary schools.

Orthodox groups are in line with the White House and say the education savings accounts expand parental choice. Other Jewish groups, such as the Religion Action Center for Reform Judaism, have opposed the accounts not as a church-state issue but from a public policy standpoint, saying the accounts siphon off money from the public school system.

Those Jewish groups opposed to the education IRAs did not make too much noise about its inclusion in the tax bill. A number of the groups had focused on what they see as the larger threat of direct government support for private schools and so fought their fight against vouchers.

Vouchers were ultimately blocked in the education bill in the U.S. House of Representatives and they are not thought to have much chance of passage in the Senate.

Opponents of the education savings accounts say lower-income families that do not have thousands in their savings cannot take advantage of the benefit and those that can will find the annual benefit is nominal.

“Every little bit helps,” countered Abba Cohen, director and counsel of the Washington office of Agudath Israel of America, a fervently Orthodox group.

Cohen said the accounts are not a government subsidy, and the Jewish community has to pursue every avenue to help those parents that send their children to Jewish day schools.

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