The 2011 Texas Legislative Session:

What Happened and What’s Next

Robert Pinhero, Vice Chair for Public Policy and Advocacy, Texas Association of Nonprofit Organizations (TANO)

A look at the Texas Association of Nonprofit Organization's final legislative report for 2011, examining legislation affecting the nonprofit sector as a whole. In addition to explaining new legislation, we'll also take a look at bills that failed to pass, since it's likely that we will see them again in the future. Find out what our sector needs to do to ensure our voices are heard and how to stay within the legal boundaries of advocacy and lobbying.

Presented at the Texas Nonprofit Summit 2011

TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS

 

8001 Centre Park Drive, Suite 120 Austin, TX 78754 (512) 381-1490 (512) 381-1499 Fax info@tano.org www.tano.org  

82nd Texas Legislature, 2011 Regular Session

SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS (as of 7/7/11)

Compiled by Richard W. Meyer, Attorney at Law

(512) 451-8145 rickmeyer@tano.org Final TANO legislative report for 2011: The Texas Legislature ended its 82nd Regular Session on May 30, and numerous bills were presented as listed here that directly or indirectly affect the interests of nonprofit organizations. The following summary lists bills and issues that should be of concern to leaders in the nonprofit sector in Texas. Almost 6,000 bills were filed, and the state’s budget challenges occupied most of the legislators’ attention during the 140-day Regular Session. The First Called Session was intended to complete unfinished budgetary issues and to consider other special subjects designated by the Governor, and it ended June 29. Bills that passed are underlined. A notation in italics following a bill summary indicates the bill’s status at the end of the session. Important issues monitored by TANO during the 2011 Regular Session include:

• Passage on May 19 of the bill to continue the state’s nonprofit capacity-building task force and inclusion of all stakeholders such as TANO (HB 1965, signed by the Governor)

• Concern from nonprofit leaders regarding proposed expansion of the Attorney General’s investigatory authority over nonprofits, foundations and trusts (HB 2921, SB 342—did not pass)

• Passage of a bill to protect free speech and advocacy rights of individuals and organizations by permitting an accelerated court review and dismissal of a suit that is determined to be without merit (HB 2973, signed by the Governor)

• Passage of a bill that limits disclosures of personal data and internal information that can be required of nonprofits, trusts or foundations that contract with public agencies (HB 3573, signed by the Governor)

• Clarification of health laws regulating non-commercially produced food items that are prepared for sale at organization fundraising events, gatherings, or farmers’ markets (HB 1139, HB 2084, HB 3387—bills did not pass)

• State legislation to roll back the imposition by local governments of “PILOT” fees (payments in lieu of taxes) on property owned by nonprofit, charitable and religious organizations (SB 714, HB 1022—did not pass).

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TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS

 

Issues raised in the 2011 First Called Session include:

• State revenues generated by purchases of extra-fee specialty auto license plates will not be diverted to the state’s general fund, as proposed in the Regular Session, but will continue to benefit the organization or cause they advocate, thanks to attention to this issue (SB 1, First Called Session, signed by the Governor).

• Persons registering as lobbyists for nonprofit organizations will see a 50 percent increase in their annual fee, and those representing Section 501(c)(6) organizations will now be able to benefit from this special registration fee category and reduced reporting requirements (SB 1).

Bills considered in the 2011 legislature affected nonprofits in the following areas:* Advancing and regulating nonprofit organizations: HB 1965: The promising nonprofit capacity-building initiative from HB 492 enacted in the 2009 legislative session created the Task Force on Strengthening Nonprofit Capacity. Its work will be continued by HB 1965 along with an expanded Interagency Coordinating Group, now expanded to include executives representing 20 large state agencies. Both groups are tasked with improving contracting relationships with state government, cooperating and collaborating with community and faith-based organizations, identifying duplications in nonprofits’ activities, and identifying gaps in state services that nonprofits could fill. These efforts establish a long-needed “footprint” in the state government realm and advance the nonprofit sector’s importance in public affairs. Passed by House and Senate; signed by the Governor, eff. 9/1/11. HB 2921 (=SB 342) **: Would significantly expand the authority of the Attorney General’s Office to investigate the internal operations of charitable organizations, without bringing formal criminal or civil charges, if the Attorney General has reason to believe that an unlawful act is occurring or is about to occur. Any charity or foundation could be required to provide, under oath, answers to questions regarding alleged unlawful activity, produce any document maintained and requested, or have its representative personally questioned and examined under oath by state investigators. HB 2921 voted favorably from House State Affairs Committee; no House floor action. SB 342 left pending in Senate Business and Industry Committee. SB 587: The Attorney General will have venue to bring a Probate Code enforcement or investigatory action in Travis County against a nonprofit entity located anywhere in the state that is claimed to be violating its duties as a charitable trust. Passed Senate and House; signed by the Governor, eff. 9/1/11. HB 593: The State Auditor would have authority to examine and audit the books and records of any grantee of federal ARRA “stimulus” funds (American Recovery and Reinvestment Act). No committee action. Fundraising activities of nonprofit organizations: HB 457: Charitable organizations conducting raffles will be permitted to expand their efforts with online solicitations to their supporters. Passed by House and Senate; signed by Governor, eff. 5/27/11. HB 1139: Would define and extend state health regulations and permit requirements applicable to a “cottage food production operation”—non-commercial or home-produced food for limited sale—

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TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS

 

including “…at an event held or sponsored by a religious or nonprofit organization”. Left pending in the House Public Health Committee. HB 2084 also defines certain “cottage food production operations” with lesser permitting requirements. Passed committee, no House floor action. HB 3387 would regulate similar sales at farmers’ markets. Passed House; left pending in Senate Health and Human Services Committee. HB 372: In this proposed repeal of a remnant of the English common law—the Rule Against Perpetuities—charitable giving of high-wealth individuals could be affected. The rule prevents personal wealth from being permanently tied up with trusts or other legal instruments in perpetuity and for the benefit of limited beneficiaries or heirs. Reported favorably from House Judiciary and Civil Jurisprudence Committee; no House floor action. HB 1682: Pressuring or coercing school district employees to participate in charitable giving activities is prohibited. Passed House and Senate; signed by the Governor, eff. 9/1/11. HB 1806: Regulation of “fishing tournament fraud” and enforcement actions are strengthened. Passed House and Senate; signed by Governor, eff. 5/21/11. Amendments to the Texas Non-Profit Corporation Law, Chapter 22, Bus. Org. Code: SB 748: Makes minor changes to the nonprofit corporation law detailing the procedure for an interested director to disclose a conflict of interest to his/her board before acting on a transaction, contract or other matter. Passed by Senate and House; signed by the Governor, eff. 9/1/11. Amendments to charitable immunity statutes in Chapter 84, Civil Practices and Remedies Code: SB 1846: A nonprofit will be able to access additional types of insurance policies, as well as self-insured plans, to comply with the financial responsibility requirements of Chapter 84 that entitle the organization and its leaders to certain immunity against legal claims. Passed Senate and House, signed by Governor, eff. 5/9/11. Various professionals and individuals would be added to the list of persons specifically granted Chapter 84 legal immunity while performing voluntary services: Social workers, HB 823, no House floor vote. Licensed family/marriage therapists, SB 1336, no committee action. Exemptions from state taxes now extended to nonprofit entities, and ‘PILOT’ fees: SB 1051 (=HB 1308): A select state review commission would periodically review all credits, exemptions and special treatment under the state’s tax laws. SB 1051, left pending in Senate Finance Committee. HB 1308, left pending in House Ways and Means Committee. HB 3201, HB 784: The Texas Sunset Advisory Commission would periodically undertake a re-examination (“sunset”) of all exemptions under the state’s tax laws, including the exemptions from property, sales and business taxes enjoyed by charitable organizations. HB 3201, left pending in House Ways and Means Committee.

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TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS

 

SB 714 (=HB 1022): Drainage fees (PILOTs) imposed by the City of Houston on utility-using tax-exempt properties owned by charitable and religious organizations would be banned by state law. PILOT refers to “payments in lieu of taxes.” SB 714 passed by Senate; no House committee action. On 4/6/2011, the Houston City Council passed an ordinance exempting churches and schools from the previously-enacted drainage fees, in response to the local public outcry and the state legislation referenced above. See also HB 3169. SB 609: Property-based municipal drainage fees will not be imposed on housing authority properties owned by a municipality. Passed Senate and House; signed by the Governor, eff. 9/1/11. HB 645: An applicant in behalf of a charitable organization’s request for property tax exemption will not have to list his/her personal identification information on the State Comptroller’s forms. Passed by House and Senate, signed by the Governor, eff. 9/1/11. SB 1757: Would amend Tax Code Section 11.18 (which details categories of property uses exempt from property tax) by including academic support for youth, in addition to athletic program support. No hearing in Senate Finance Committee. Nonprofit board, officer, employment, volunteer and fundraising issues: HB 3252, HB 178, HB 202: Organizations contracting with the state must clear employee status through a federal government-certified data verification service. HB 3252 reported favorably from the House State Affairs Committee; HB 178 and 202 left pending. HB 878 includes subcontractors in the required verification process. HB 140, no committee hearing. See also SB 84. HB 73: Criminal history checks would be required of all state employees, interns, volunteers, contractors and subcontractors related to state agency contracting and spending. Left pending in House State Affairs Committee. HB 1553: Any public agency or nonprofit employer receiving state funds would have to report the citizenship of any person served by programs. Left pending in House State Affairs Committee. Open meetings / open records issues: HB 3573: Forbids a government entity from entering into a contract with a foundation, trust, or charitable organization with contract terms that also require the disclosure of the race, religion, gender, national origin, age, ethnicity, marital status, sexual orientation, or political affiliation of persons managing or benefitting from the foundation, trust or organization. Passed by House and Senate, signed by the Governor, eff. 9/1/11. SB 1571: Provides that a nonprofit organization that performs a public function is governed by Government Code, Chapter 552 (public information disclosure laws). Passed Senate committee, Senate floor vote never held. SB 1829: Limits the scope of public information laws affecting a chamber of commerce or a nonprofit organization that provides economic development services to a public agency. Passed Senate; no action by House State Affairs Committee.

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TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS

 

Public advocacy / Ethics Commission (lobbying) issues: HB 2973: Provides for an accelerated court review and possible dismissal of a groundless suit against a person or group advocating for basic free-speech rights. Passed House and Senate; signed by the Governor, eff. 9/1/11. HB 160: Permits a streamlined court review and dismissal of “slap” suits--harassing or groundless lawsuit brought against a complaining person or group critical of another interest group, in a public controversy--and determined by the court to be brought to silence the opponent. No committee action. HB 508 (= SB 128): Former legislators would be forbidden from lobbying for two years, except if lobbying for nonprofit organizations, disabilities, and low-income advocacy groups, and if acting without compensation. No committee action on either bill. Nonprofit social service organization and property owner association issues: SB 142: A long and comprehensive bill affecting only property owner associations. Passed Senate; no House floor action. See also HB 3347, reported favorably from House Business and Industry Committee. HB 2869, passed by House and Senate, signed by the Governor, eff. 9/1/11. HB 3348, reported favorably from House Business and Industry Committee. HB 2328: Property owner associations would be regulated by the Texas Finance Commission, with annual registration, reporting requirements and governance standards. Reported favorably from House Business and Industry Committee. Other bills: HB 8: Will effectively ban creation of new “land transfer fees” in Texas. These fees are often recorded as part of permanent subdivision restrictions, which subsequently require payment by the seller of a percentage of the sales price to a designated party each time the parcel is resold. The claim by fee proponents that a small percentage of the fee collected is often designated to benefit a local charitable organization appears outweighed by broad opposition to this hidden fee, which is also the subject of review by federal regulators of residential loans. Passed House and Senate; signed by the Governor, eff. 9/1/11. HB 1599: Would permit the Texas Corrections Industries (prison industries) to offer its products and services for sale to nonprofit organizations as well as public agencies. Pending in House Corrections Committee. HB 421: Qualified nonprofit corporations would be eligible to receive ownership of remainder right-of-way properties determined by TXDOT to be unusable for its purposes. No committee action.

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TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS

 

*The above list does not include bills introduced relating to the following: Nonprofit hospitals, health care or nursing institutions and plans; credit unions; electric or agricultural cooperatives; private and charter schools and colleges; cemetery corporations; quasi-public nonprofit entities. **Many bills have an identical “companion” bill in the other house, bearing a different bill number. Access bills, background information, and current status at Texas Legislature Online, www.capitol.state.tx.us

___________________________________

*The above list does not include bills introduced relating to the following: Nonprofit hospitals, health care or nursing institutions and plans; credit unions; electric or agricultural cooperatives; private and charter schools and colleges; cemetery corporations; quasi-public nonprofit entities. **Many bills have an identical “companion” bill in the other house, bearing a different bill number. Access bills, background information, and current status at Texas Legislature Online, www.capitol.state.tx.us

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What is Lobbying?Lobbying consists of communications that are intended to influence specific legislation. Lobbying communications are of two kinds—direct and grass roots.A direct lobbying communication is generally one made to either a legislator, an employee of a legislative body, or any other government employee who may participate in the formulation of the legislation.  It must refer to a specific piece of legislation and express a view on it. A grass roots lobbying communication is generally an attempt to influence specific legislation by encouraging the public, other than the organization’s members, to contact legislators about that legislation.  It must refer to specific legislation, reflect a view on it and encourage the recipient to take lobbying action on it.

What is Advocacy?Public support for or commendation of a particular cause or policy.

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LOBBYING RULES FOR ELECTING AND NONELECTING CHARITIES

Electing Charity Nonelecting Charity Lobbying Limits

20% of first $500,000 of “exempt purpose expenditures” and decreasing percentages after that, up to $1 million cap

Less than a “substantial” part of activities; IRS employs subjective “balancing” test*

Volunteer and other Cost-free Activities

Do not count against limits on lobbying

Count in determining “substantial”

Lobbying Definition Defined, with specific exclusions for invited testimony; nonpartisan analysis, study & research; self defense

Not defined, no specific exclusions in statute or regulations

Excessive Lobbying Penalty for Organization

25% excise tax on excess over limits in any year

5% excise tax on all lobbying expenses if substantial lobbying results in revocation

Excessive Lobbying Penalty for Organization’s Officers/Directors

No specific liability 5% if “substantial” lobbying willfully or unreasonably authorized

Revocation of Tax Status

If lobbying exceeds 150% of limits generally over 4 years

If “substantial” lobbying in any one year

Recordkeeping

Must document all lobbying expenses, both grassroots and direct

Must document all lobbying activities and expenses

Tax Form 990A

Numbers only are required: grassroots and overall lobbying expenditures and percentages of “exempt purpose expenditures” that these expenditures comprise

Detailed description of the legislative activities and a classified schedule of the expenses paid or incurred

Audit Exposure

No difference, whether electing or nonelecting

*The factors the IRS will “balance” in determining if lobbying is “substantial” include the importance of lobbying activities to the organization’s objectives and circumstances, the organization’s expenditures on lobbying activities, and the organization’s overall level of spending and activity.

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Election/Revocation of Election by an EligibleSection 501(c)(3) Organization To Make

Expenditures To Influence Legislation

Form 5768 (Rev. September 2009)

For IRSUse Only ©

Department of the TreasuryInternal Revenue Service

(Under Section 501(h) of the Internal Revenue Code) Employer identification number

Name of organization

Number and street (or P.O. box no., if mail is not delivered to street address)

City, town or post office, and state

Election—As an eligible organization, we hereby elect to have the provisions of section 501(h) of the Code, relating toexpenditures to influence legislation, apply to our tax year ending andall subsequent tax years until revoked.

1

(Month, day, and year)

Note: This election must be signed and postmarked within the first taxable year to which it applies.

Revocation—As an eligible organization, we hereby revoke our election to have the provisions of section 501(h) of the Code,relating to expenditures to influence legislation, apply to our tax year ending

2

(Month, day, and year) Note: This revocation must be signed and postmarked before the first day of the tax year to which it applies.

Under penalties of perjury, I declare that I am authorized to make this (check applicable box) ©

(Date)

(Type or print name and title)

(Signature of officer or trustee)

2. Section 170(b)(1)(A)(iii) (relating tohospitals and medical researchorganizations),

General Instructions Section references are to the InternalRevenue Code.

3. Section 170(b)(1)(A)(iv) (relating toorganizations supporting governmentschools),

Section 501(c)(3) states that anorganization exempt under that sectionwill lose its tax-exempt status and itsqualification to receive deductiblecharitable contributions if a substantialpart of its activities are carried on toinfluence legislation. Section 501(h),however, permits certain eligible section501(c)(3) organizations to elect to makelimited expenditures to influencelegislation. An organization making theelection will, however, be subject to anexcise tax under section 4911 if itspends more than the amountspermitted by that section. Also, theorganization may lose its exempt statusif its lobbying expenditures exceed thepermitted amounts by more than 50%over a 4-year period. For any tax year inwhich an election under section 501(h) isin effect, an electing organization mustreport the actual and permitted amountsof its lobbying expenditures and grassroots expenditures (as defined in section4911(c)) on its annual return requiredunder section 6033. See Part II-A ofSchedule C (Form 990 or Form 990-EZ).Each electing member of an affiliatedgroup must report these amounts forboth itself and the affiliated group as awhole.

For more details, see section 4911and section 501(h).

4. Section 170(b)(1)(A)(vi) (relating toorganizations publicly supported bycharitable contributions),

Note. A private foundation (including aprivate operating foundation) is not aneligible organization.

5. Section 509(a)(2) (relating toorganizations publicly supported byadmissions, sales, etc.), or

Where to file. Mail Form 5768 to theDepartment of the Treasury, InternalRevenue Service Center, Ogden, UT84201-0027.

6. Section 509(a)(3) (relating toorganizations supporting certain typesof public charities other than thosesection 509(a)(3) organizations thatsupport section 501(c)(4), (5), or (6)organizations). Disqualified organizations. The

following types of organizations are notpermitted to make the election: a. Section 170(b)(1)(A)(i) organizations

(relating to churches),

b. An integrated auxiliary of a church orof a convention or association ofchurches, or c. A member of an affiliated group oforganizations if one or more membersof such group is described in a or bof this paragraph.

To make or revoke the election, enterthe ending date of the tax year to whichthe election or revocation applies in item1 or 2, as applicable, and sign and datethe form in the spaces provided.

Affiliated organizations. Organizationsare members of an affiliated group oforganizations only if (1) the governinginstrument of one such organizationrequires it to be bound by the decisionsof the other organization on legislativeissues, or (2) the governing board of onesuch organization includes persons (i)who are specifically designatedrepresentatives of another suchorganization or are members of thegoverning board, officers, or paidexecutive staff members of such otherorganization, and (ii) who, byaggregating their votes, have sufficientvoting power to cause or prevent actionon legislative issues by the first suchorganization.

Eligible organizations. A section501(c)(3) organization is permitted tomake the election if it is not adisqualified organization (see below) andis described in: 1. Section 170(b)(1)(A)(ii) (relating to

educational institutions),

Form 5768 (Rev. 9-2009)

Cat. No. 12125M

Room/suite

ZIP + 4

election

revocation on behalf of the above named organization.

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Advocacy Strategies

Be an Informed Advocate

Find Out Who Represents You

Share Your Story

Make the Community Connection

Communicate with Your Representatives

Organize a Letter Campaign

Connect Legislators to Local Efforts

Work with the Media

Make a Legislative Office Visit

Testify at the Capitol

Become a Direct Action Organizer

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CBO

Summary

Under current law, taxpayers who itemize deduc-tions may deduct the amount they donate to charities from their adjusted gross income (AGI) when determin-ing how much they owe in federal income taxes. That deduction gives people who itemize an incentive to con-tribute to charities. Like other forms of preferential tax treatment, the deduction also costs the federal govern-ment revenues that it might otherwise collect. At current levels of charitable giving, the cost of that deduction—measured as the additional revenues that could be col-lected if the deduction was eliminated—will total about $230 billion between 2010 and 2014, according to the Joint Committee on Taxation (JCT).1

Numerous proposals have been made in recent years to alter the income tax treatment of charitable giving by individual donors. Some proposals aim to reduce the cost to the government by imposing a floor (or minimum level) that a person’s charitable giving would have to exceed to qualify for preferential tax treatment. Other proposals would extend the current charitable deduction to taxpayers who do not itemize deductions or would replace the current deduction with a nonrefundable tax credit available to all taxpayers who make charitable contributions.2

For this analysis, the Congressional Budget Office (CBO) examined how much taxpayers in various income groups

donate to charities and what types of organizations receive those donations. CBO also investigated how changing the structure of tax incentives for giving would affect the tax subsidy (the cost in forgone revenues to the federal government), the overall level of charitable giving, and the extent to which different income groups benefit from the tax preference. Specifically, CBO looked at 11 options for altering the current income tax treat-ment of charitable giving, which can be grouped into 4 categories:

Retaining the current deduction for itemizers but adding a floor.

Allowing all taxpayers to claim the deduction, with or without a floor.

Replacing the deduction with a nonrefundable credit for all taxpayers, equal to 25 percent of a taxpayer’s charitable donations, with or without a floor.

Replacing the deduction with a nonrefundable credit for all taxpayers, equal to 15 percent of a taxpayer’s charitable donations, with or without a floor.

For each of the four categories, CBO analyzed two potential floors: a fixed dollar amount ($500 for single taxpayers and $1,000 for couples filing a joint return) and a percentage of income (2 percent of AGI). Only contributions in excess of the floor would be deductible or eligible for a credit. The analysis uses data for 2006, the most recent year for which the Internal Revenue Ser-vice’s public-use sample of individual income tax returns is available. The tax treatment of charitable contributions is generally the same today as it was in 2006; however, because of rising incomes and contribution amounts, the options that include a fixed dollar floor would have a somewhat different impact today than presented here.

1. A deduction for charitable contributions also exists under the cor-porate income tax. JCT estimates a much smaller five-year cost for that deduction: about $17 billion. See Joint Committee on Taxa-tion, Estimates of Federal Tax Expenditures for Fiscal Years 2010–2014, JCS-3-10 (December 15, 2010), www.jct.gov/publications .html?func=startdown&id=3718.

2. Taxpayers can use tax credits to reduce their income tax liability (the amount they owe). Nonrefundable credits can lower income tax liability to zero, but excess credits cannot be used to increase tax refunds. In contrast, refundable credits that exceed income tax liability are paid to taxpayers as refunds.

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10 OPTIONS FOR CHANGING THE TAX TREATMENT OF CHARITABLE GIVING

CBO

Table 3.

Total Donations and Tax Subsidies Under Current Law and Eleven Policy Options, 2006

Source: Congressional Budget Office.

Notes: The simulation results are for tax year 2006, and all figures are at 2006 levels.

n.a. = not applicable; $500/$1,000 = $500 for individual filers and $1,000 for joint filers; AGI = adjusted gross income.

Extending the current deduction to all filers or making a relatively large nonrefundable tax credit available to all filers would have the opposite effect: increasing both donations and the tax subsidy. However, CBO’s analysis indicates that if either of those approaches was combined with a contribution floor, it would be possible to raise donations while simultaneously reducing the tax subsidy. For instance, combining a 25 percent tax credit with a

$500/$1,000 floor would raise donations by $1.5 billion and boost federal revenues by $2.4 billion. Other floors set sufficiently low could be combined with a deduction or a 25 percent tax credit to achieve a similar result.

If a much smaller credit for all filers, such as 15 percent, was combined with a floor, the effect on total donations and the total tax subsidy would be more like that of

Floor for Eligible

Donations

Deduction Available No floor 203.0 n.a. n.a. 40.9 n.a. n.a.

Keep Deduction AvailableOnly to Itemizers but

Option 1 $500/$1,000 202.5 -0.5 -0.2 35.4 -5.5 -13.5Option 2 2 percent of AGI 200.0 -3.0 -1.5 25.2 -15.7 -38.5

Extend Deduction to

Option 3 No floor 205.0 2.0 1.0 46.1 5.2 12.8Option 4 $500/$1,000 203.8 0.8 0.4 38.4 -2.5 -6.1Option 5 2 percent of AGI 201.1 -1.9 -0.9 27.8 -13.1 -32.1

Convert Deduction to

Option 6 No floor 205.7 2.7 1.3 48.0 7.1 17.4Option 7 $500/$1,000 204.5 1.5 0.7 38.5 -2.4 -5.8Option 8 2 percent of AGI 202.0 -1.0 -0.5 29.0 -11.9 -29.2

Convert Deduction to

Option 9 No floor 195.2 -7.8 -3.9 27.6 -13.3 -32.6Option 10 $500/$1,000 194.4 -8.6 -4.2 21.9 -19.0 -46.5Option 11 2 percent of AGI 193.0 -10.0 -4.9 16.3 -24.6 -60.1

Add Floor

All Filers

25 Percent NonrefundableCredit for All Filers

15 Percent NonrefundableCredit for All Filers

Percent

Current Law

Only to Itemizers

Options to Change Current Law

(Billions of Billions of (Billions of Billions of2006 dollars) Dollars Percent 2006 dollars) Dollars

Contributions Current-Law Level Tax Subsidy Current-Law Level

Change in Total Change inTotal Contributions from Tax Subsidy from

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