I 

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.

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 Freedom 

5 Act’’. 

6 SEC. 2. CREDIT FOR CONTRIBUTIONS FOR THE BENEFIT OF 

7 ELEMENTARY AND SECONDARY SCHOOLS. 

8 (a) IN GENERAL.—Subpart B of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 
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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 30B. CREDIT FOR CONTRIBUTIONS FOR THE BENEFIT 

4 OF ELEMENTARY AND SECONDARY SCHOOLS. 

5 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al6 lowed as a credit against the tax imposed by this chapter 

7 for the taxable year an amount equal to 50 percent of the 

8 qualified charitable contributions of the taxpayer for the 

9 taxable year. 

10 ‘‘(b) LIMITATIONS.—

11 ‘‘(1) INDIVIDUALS, ETC.—In the case of a tax12 payer other than a corporation, the credit allowed by 

13 subsection (a) for any taxable year shall not exceed 

14 $250 ($500 in the case of a joint return). 

15 ‘‘(2) CORPORATIONS.—In the case of a corpora16 tion, the credit allowed by subsection (a) shall not 

17 exceed $50,000. 

18 ‘‘(3) LIMITATION IN CASE OF STATE CREDIT.—

19 Subject to subsection (d)(2), in the case of a tax20 payer which claims a credit on a State income tax 

21 return for any qualified charitable contribution, the 

22 amount of credit under this section shall be the less23 er of—

24 ‘‘(A) the amount which, when added to the 

25 amount of the State income tax credit, equals 
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1 the total amount of the taxpayer’s qualified 

2 charitable contributions, or 

3 ‘‘(B) the limitation amount that applies 

4 under paragraph (1) or (2). 

5 ‘‘(c) QUALIFIED CHARITABLE CONTRIBUTION.—For 

6 purposes of this section—

7 ‘‘(1) IN GENERAL.—The term ‘qualified chari8 table contribution’ means, with respect to any tax9 able year, the aggregate amount allowable as a de10 duction under section 170 (determined without re11 gard to subsection (d)(1)) for cash contributions—

12 ‘‘(A) to an education investment organiza13 tion, or 

14 ‘‘(B) to a public, private, or religious 

15 school providing education at the elementary or 

16 secondary level. 

17 ‘‘(2) EDUCATION INVESTMENT ORGANIZA18 TION.—For purposes of this section—

19 ‘‘(A) IN GENERAL.—The term ‘education 

20 investment organization’ means any organiza21 tion described in section 170(c)(2) if the annual 

22 disbursements of the organization in the form 

23 of grants for qualified elementary and sec24 ondary education expenses are normally not less 

25 than 90 percent of the sum of such organiza-
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1 tion’s annual gross income and contributions 

2 and gifts. 

3 ‘‘(B) QUALIFIED ELEMENTARY AND SEC4 ONDARY EDUCATION EXPENSES.—The term 

5 ‘qualified elementary and secondary education 

6 expenses’ has the meaning given such term by 

7 section 530(b)(4), except that ‘child’ shall be 

8 substituted for ‘beneficiary’ and ‘a child’ shall 

9 be substituted for ‘the designated beneficiary of 

10 the trust’ in clauses (i) and (iii) of subpara11 graph (A). 

12 ‘‘(d) SPECIAL RULES.—

13 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No deduc14 tion shall be allowed under this chapter for any con15 tribution for which credit is allowed under this sec16 tion. 

17 ‘‘(2) APPLICATION WITH OTHER CREDITS.—

18 The credit allowed by subsection (a) for any taxable 

19 year shall not exceed the excess of—

20 ‘‘(A) the sum of the regular tax liability 

21 (as defined in section 26(b)) plus the tax im22 posed by section 55, over 

23 ‘‘(B) the sum of the credits allowable 

24 under this part (other than sections 21, 22, 24, 
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1 25A, 25B, subpart C, and this section) and 

2 under section 1397E. 

3 ‘‘(3) CONTROLLED GROUPS.—All persons who 

4 are treated as one employer under subsection (a) or 

5 (b) of section 52 shall be treated as 1 taxpayer for 

6 purposes of this section. 

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

8 taxpayer may elect to have this section not apply for any 

9 taxable year.’’. 

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

11 for subpart B of part IV of subchapter A of chapter 1 

12 of such Code is amended by adding at the end the fol13 lowing new item:

‘‘Sec. 30B. Credit for contributions for the benefit of elementary 

and secondary schools.’’.

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2003. 

17 SEC. 3. EXCLUSION FROM GROSS INCOME OF GRANTS 

18 FROM EDUCATION INVESTMENT ORGANIZA19 TIONS. 

20 (a) IN GENERAL.—Part III of subchapter B of chap21 ter 1 of the Internal Revenue Code of 1986 (relating to 

22 items specifically excluded from gross income) is amended 

23 by inserting after section 117 the following new section: 
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1 ‘‘SEC. 117A. GRANTS FROM EDUCATION INVESTMENT ORGA2 NIZATIONS. 

3 ‘‘(a) GENERAL RULE.—Gross income does not in4 clude any amount received as a grant for qualified elemen5 tary and secondary education expenses from an education 

6 investment organization. 

7 ‘‘(b) DEFINITIONS.—For purposes of this section, the 

8 terms ‘qualified elementary and secondary education ex9 penses’ and ‘education investment organization’ have the 

10 meanings provided by section 30B.’’. 

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

12 for part III of subchapter B of chapter 1 of such Code 

13 is amended by inserting after the item relating to section 

14 117 the following:

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

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

16 this section shall apply to amounts received in taxable 

17 years beginning after December 31, 2003. 

18 SEC. 4. REVISION OF DEFINITION OF SCHOOL FOR PUR19 POSES OF QUALIFIED ELEMENTARY AND 

20 SECONDARY EDUCATION EXPENSES. 

21 (a) IN GENERAL.—Paragraph (4) of section 530(b) 

22 of the Internal Revenue Code of 1986 (defining qualified 

23 elementary and secondary education expenses) is amend24 ed—
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1 (1) in clauses (i) and (ii) of subparagraph (A), 

2 by striking ‘‘public, private, or religious’’, and 

3 (2) in subparagraph (B), by inserting after 

4 ‘‘any school’’ the following: ‘‘, including a public, 

5 private, religious, or home school,’’. 

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2003.

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