I

106TH CONGRESS

1ST SESSION H. R. 936

To amend the Internal Revenue Code of 1986 to allow a credit against

income tax for amounts contributed to charitable organizations which

provide elementary or secondary school scholarships and for contributions

of, and for, instructional materials and materials for extracurricular

activities.

IN THE HOUSE OF REPRESENTATIVES

MARCH 2, 1999

Mr. PAUL 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 against income tax for amounts contributed to

charitable organizations which provide elementary or secondary school scholarships and for contributions of, and

for, instructional materials and materials for extracurricular activities.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Education Improve5 ment Tax Cut Act’’.
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1 SEC. 2. CREDIT FOR CONTRIBUTIONS TO CHARITABLE OR2 GANIZATIONS WHICH PROVIDE ELEMENTARY

3 OR SECONDARY SCHOOL SCHOLARSHIPS.

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to nonrefundable personal credits) is

7 amended by inserting after section 25A the following new

8 section:

9 ‘‘SEC. 25B. CONTRIBUTIONS TO ORGANIZATIONS PROVID10 ING ELEMENTARY OR SECONDARY SCHOOL

11 SCHOLARSHIPS.

12 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in13 dividual, there shall be allowed as a credit against the tax

14 imposed by this chapter for the taxable year an amount

15 equal to the qualified scholarship contributions of the tax16 payer for the taxable year.

17 ‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub18 section (a) for any taxable year shall not exceed $3,000

19 ($1,500 in the case of a married individual (as determined

20 under section 7703) filing a separate return).

21 ‘‘(c) QUALIFIED SCHOLARSHIP CONTRIBUTION.—

22 For purposes of this section—

23 ‘‘(1) IN GENERAL.—The term ‘qualified schol24 arship contribution’ means, with respect to any tax25 able year, the amount which would (but for sub26 section (e)) be allowable as a deduction under sec-
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1 tion 170 for cash contributions to a school tuition

2 organization.

3 ‘‘(2) SCHOOL TUITION ORGANIZATION.—

4 ‘‘(A) IN GENERAL.—The term ‘school tui5 tion organization’ means any organization de6 scribed in section 170(c)(2) if the annual dis7 bursements of the organization for elementary

8 and secondary school scholarships are normally

9 not less than 90 percent of the sum of such or10 ganization’s annual gross income and contribu11 tions and gifts.

12 ‘‘(B) ELEMENTARY AND SECONDARY

13 SCHOOL SCHOLARSHIP.—The term ‘elementary

14 and secondary school scholarship’ means any

15 scholarship excludable from gross income under

16 section 117 for expenses related to education at

17 or below the 12th grade.

18 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction

19 shall be allowed under this chapter for any contribution

20 for which a credit is allowed under this section.

21 ‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.—

22 ‘‘(1) IN GENERAL.—A taxpayer may elect to

23 have this section not apply for any taxable year.

24 ‘‘(2) TIME FOR MAKING ELECTION.—An elec25 tion under paragraph (1) for any taxable year may
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1 be made (or revoked) at any time before the expira2 tion of the 3-year period beginning on the last date

3 prescribed by law for filing the return for such tax4 able year (determined without regard to extensions).

5 ‘‘(f) COST-OF-LIVING ADJUSTMENT.—In the case of

6 any taxable year beginning in a calendar year after 2000,

7 each dollar amount contained in subsection (b) shall be

8 increased by an amount equal to—

9 ‘‘(1) such dollar amount, multiplied by

10 ‘‘(2) the cost-of-living adjustment determined

11 under section 1(f)(3) for the calendar year in which

12 the taxable year begins, by substituting ‘calendar

13 year 1999’ for ‘calendar year 1992’ in subparagraph

14 (B) thereof.

15 If any increase determined under the preceding sentence

16 is not a multiple of $10, such increase shall be increased

17 to the next highest multiple of $10. In the case of a mar18 ried individual (as determined under section 7703) filing

19 a separate return, the preceding sentence shall be applied

20 by substituting ‘$5’ for ‘$10’ each place it appears.’’.

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for subpart A of part IV of subchapter A of chapter 1

23 of such Code is amended by inserting after the item relat24 ing to section 25A the following new item:

‘‘Sec. 25B. Contributions to organizations providing elementary or

secondary school scholarships.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1999.

4 SEC. 3. CREDIT FOR CONTRIBUTIONS OF AND FOR IN5 STRUCTIONAL MATERIALS AND MATERIALS

6 FOR EXTRACURRICULAR ACTIVITIES.

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of

9 1986 (relating to nonrefundable personal credits) is

10 amended by inserting after section 25B the following new

11 section:

12 ‘‘SEC. 25C. CONTRIBUTIONS OF AND FOR INSTRUCTIONAL

13 MATERIALS AND MATERIALS FOR EXTRA14 CURRICULAR ACTIVITIES.

15 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in16 dividual, there shall be allowed as a credit against the tax

17 imposed by this chapter for the taxable year an amount

18 equal to the qualified school materials contributions of the

19 taxpayer for the taxable year.

20 ‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub21 section (a) for any taxable year shall not exceed $3,000

22 ($1,500 in the case of a married individual (as determined

23 under section 7703) filing a separate return).

24 ‘‘(c) QUALIFIED SCHOOL MATERIALS CONTRIBU25 TION.—For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified school

2 materials contribution’ means, with respect to any

3 taxable year, the amount which would (but for sub4 section (e)) be allowable as a deduction under sec5 tion 170 for—

6 ‘‘(A) any cash contribution to any elemen7 tary or secondary school if such contribution is

8 designated to be used solely to acquire qualified

9 school materials,

10 ‘‘(B) any contribution of qualified school

11 materials to any elementary or secondary

12 school, and

13 ‘‘(C) any cash contribution to a school ma14 terials organization.

15 ‘‘(2) ELEMENTARY OR SECONDARY SCHOOL.—

16 The term ‘elementary or secondary school’ means

17 any organization described in section

18 170(b)(1)(A)(ii) which provides education solely at

19 or below the 12th grade.

20 ‘‘(3) SCHOOL MATERIALS ORGANIZATION.—

21 ‘‘(A) IN GENERAL.—The term ‘school ma22 terials organization’ means any organization de23 scribed in section 170(c)(2) if—
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1 ‘‘(i) the primary function of the orga2 nization is to raise funds for elementary or

3 secondary schools, and

4 ‘‘(ii) the annual disbursements of the

5 organization for qualified school materials

6 which are provided to elementary and sec7 ondary schools are normally not less than

8 90 percent of the sum of such organiza9 tion’s annual gross income and contribu10 tions and gifts.

11 ‘‘(B) QUALIFIED SCHOOL MATERIALS.—

12 The term ‘qualified school materials’ means—

13 ‘‘(i) instructional materials and equip14 ment, including library books and mate15 rials, computers, and computer software,

16 and

17 ‘‘(ii) materials and equipment for

18 school-sponsored extracurricular activities.

19 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction

20 shall be allowed under this chapter for any contribution

21 for which a credit is allowed under this section.

22 ‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.—

23 ‘‘(1) IN GENERAL.—A taxpayer may elect to

24 have this section not apply for any taxable year.
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1 ‘‘(2) TIME FOR MAKING ELECTION.—An elec2 tion under paragraph (1) for any taxable year may

3 be made (or revoked) at any time before the expira4 tion of the 3-year period beginning on the last date

5 prescribed by law for filing the return for such tax6 able year (determined without regard to extensions).

7 ‘‘(f) COST-OF-LIVING ADJUSTMENT.—In the case of

8 any taxable year beginning in a calendar year after 2000,

9 each dollar amount contained in subsection (b) shall be

10 increased by an amount equal to—

11 ‘‘(1) such dollar amount, multiplied by

12 ‘‘(2) the cost-of-living adjustment determined

13 under section 1(f)(3) for the calendar year in which

14 the taxable year begins, by substituting ‘calendar

15 year 1999’ for ‘calendar year 1992’ in subparagraph

16 (B) thereof.

17 If any increase determined under the preceding sentence

18 is not a multiple of $10, such increase shall be increased

19 to the next highest multiple of $10. In the case of a mar20 ried individual (as determined under section 7703) filing

21 a separate return, the preceding sentence shall be applied

22 by substituting ‘$5’ for ‘$10’ each place it appears.’’.

23 (b) CLERICAL AMENDMENT.—The table of sections

24 for subpart A of part IV of subchapter A of chapter 1
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1 of such Code is amended by inserting after the item relat2 ing to section 25B the following new item:

‘‘Sec. 25C. Contributions of and for instructional materials and

materials for extracurricular activities.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 December 31, 1999.

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