H.R. 5192 (107th): Education Freedom Act

107th Congress, 2001–2002. Text as of Jul 23, 2002 (Introduced).

Status & Summary | PDF | Source: GPO

HR 5192 IH

107th CONGRESS

2d Session

H. R. 5192

To amend the Internal Revenue Code of 1986 to allow a credit for contributions for the benefit of elementary and secondary schools.

IN THE HOUSE OF REPRESENTATIVES

JULY 23, 2002

Mr. SCHAFFER (for himself, Mr. HOEKSTRA, Mr. SHOWS, Mr. LIPINSKI, Mr. CAMP, Mr. LEWIS of Kentucky, Mr. MCINNIS, Mr. KINGSTON, Mr. DEMINT, Mr. SHADEGG, Mr. TANCREDO, Mr. CANTOR, Mr. SMITH of Michigan, Mr. TIBERI, Mr. PITTS, Ms. HART, Mr. GUTKNECHT, Mr. PAUL, Mr. BARR of Georgia, Mr. AKIN, Mr. KERNS, Mr. TERRY, Mr. SENSENBRENNER, Mr. BURTON of Indiana, Mr. SOUDER, and Mr. PICKERING) introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to allow a credit for contributions for the benefit of elementary and secondary schools.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Education Freedom Act’.

SEC. 2. CREDIT FOR CONTRIBUTIONS FOR THE BENEFIT OF ELEMENTARY AND SECONDARY SCHOOLS.

    (a) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

‘SEC. 30B. CREDIT FOR CONTRIBUTIONS FOR THE BENEFIT OF ELEMENTARY AND SECONDARY SCHOOLS.

    ‘(a) ALLOWANCE OF CREDIT- There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of the qualified charitable contributions of the taxpayer for the taxable year.

    ‘(b) LIMITATIONS-

      ‘(1) INDIVIDUALS, ETC- In the case of a taxpayer other than a corporation, the credit allowed by subsection (a) for any taxable year shall not exceed $250 ($500 in the case of a joint return).

      ‘(2) CORPORATIONS- In the case of a corporation, the credit allowed by subsection (a) shall not exceed $50,000.

      ‘(3) LIMITATION IN CASE OF STATE CREDIT- Subject to subsection (d)(2), in the case of a taxpayer which claims a credit on a State income tax return for any qualified charitable contribution, the amount of credit under this section shall be the lesser of--

        ‘(A) the amount which, when added to the amount of the State income tax credit, equals the total amount of the taxpayer’s qualified charitable contributions, or

        ‘(B) the limitation amount that applies under paragraph (1) or (2).

    ‘(c) QUALIFIED CHARITABLE CONTRIBUTION- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified charitable contribution’ means, with respect to any taxable year, the aggregate amount allowable as a deduction under section 170 (determined without regard to subsection (d)(1)) for cash contributions--

        ‘(A) to an education investment organization, or

        ‘(B) to a public, private, or religious school providing education at the elementary or secondary level.

      ‘(2) EDUCATION INVESTMENT ORGANIZATION- For purposes of this section--

        ‘(A) IN GENERAL- The term ‘education investment organization’ means any organization described in section 170(c)(2) if the annual disbursements of the organization in the form of grants for qualified elementary and secondary education expenses are normally not less than 90 percent of the sum of such organization’s annual gross income and contributions and gifts.

        ‘(B) QUALIFIED ELEMENTARY AND SECONDARY EDUCATION EXPENSES- The term ‘qualified elementary and secondary education expenses’ has the meaning given such term by section 530(b)(4), except that ‘child’ shall be substituted for ‘beneficiary’ and ‘a child’ shall be substituted for ‘the designated beneficiary of the trust’ in clauses (i) and (iii) of subparagraph (A).

    ‘(d) SPECIAL RULES-

      ‘(1) DENIAL OF DOUBLE BENEFIT- No deduction shall be allowed under this chapter for any contribution for which credit is allowed under this section.

      ‘(2) APPLICATION WITH OTHER CREDITS- The credit allowed by subsection (a) for any taxable year shall not exceed the excess of--

        ‘(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

        ‘(B) the sum of the credits allowable under this part (other than sections 21, 22, 24, 25A, 25B, subpart C, and this section) and under section 1397E.

      ‘(3) CONTROLLED GROUPS- All persons who are treated as one employer under subsection (a) or (b) of section 52 shall be treated as 1 taxpayer for purposes of this section.

    ‘(e) ELECTION TO HAVE CREDIT NOT APPLY- A taxpayer may elect to have this section not apply for any taxable year.’.

    (b) CLERICAL AMENDMENT- The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

‘Sec. 30B. Credit for contributions for the benefit of elementary and secondary schools.’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2002.

SEC. 3. EXCLUSION FROM GROSS INCOME OF GRANTS FROM EDUCATION INVESTMENT ORGANIZATIONS.

    (a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by inserting after section 117 the following new section:

‘SEC. 117A. GRANTS FROM EDUCATION INVESTMENT ORGANIZATIONS.

    ‘(a) GENERAL RULE- Gross income does not include any amount received as a grant for qualified elementary and secondary education expenses from an education investment organization.

    ‘(b) DEFINITIONS- For purposes of this section, the terms ‘qualified elementary and secondary education expenses’ and ‘education investment organization’ have the meanings provided by section 30B.’.

    (b) CLERICAL AMENDMENT- The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 117 the following:

‘Sec. 117A. Grants from education investment organizations.’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to amounts received in taxable years beginning after December 31, 2002.

SEC. 4. REVISION OF DEFINITION OF SCHOOL FOR PURPOSES OF QUALIFIED ELEMENTARY AND SECONDARY EDUCATION EXPENSES.

    (a) IN GENERAL- Paragraph (4) of section 530(b) of the Internal Revenue Code of 1986 (defining qualified elementary and secondary education expenses) is amended--

      (1) in clauses (i) and (ii) of subparagraph (A), by striking ‘public, private, or religious’, and

      (2) in subparagraph (B), by inserting after ‘any school’ the following: ‘, including a public, private, religious, or home school,’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2002.