108th CONGRESS
1st Session
H. R. 282
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
January 8, 2003
Mr. HOEKSTRA (for himself, Mr. TANCREDO, and Mr. SOUDER) 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.
`(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).
`(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, 2003.
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, 2003.
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, 2003.
END
