ANCHESTER, N.H. - Senator John McCain's tax plan could cause charities, universities, and art museums to lose as much as $9 billion over five years, the Bush campaign charged yesterday in the escalating Republican primary fight over taxes.
''Clearly, anything that would take money away from a charity is either a mistake or a step in the wrong direction,'' said Ari Fleischer, spokesman for Texas Governor George W. Bush.
According to McCain's plan, people who give charitable contributions in the form of stock, real estate, bonds, or artwork would no longer be able to take a tax deduction for the current, appreciated value of the gift.
Instead, the donor could take a deduction only for the original cost of the asset. The McCain campaign describes this as closing a loophole for the very rich, while the Bush campaign says it would kill off incentives for giving.
Stocks are a popular gift for giving. For example, 30 percent of the $452 million worth of gifts to Harvard University last year came in the form of stocks, said Andrew Tiedemann, director of communications for the Harvard development office.
The Congressional Budget Office said that in 1996, 32 million taxpayers claimed $86 billion in deductions for charitable contributions, reducing federal revenue by about $22 billion. Limiting that tax deduction would raise revenues by about $9.1 billion over five years, or $17.6 billion over 10 years, the CBO said in an analysis in April 1999.
Representatives of colleges, universities, philanthropic organizations, and other charities reacted sharply yesterday as the Bush campaign spread word of the McCain provision.
''The entire charitable community would be outraged by anything like that,'' said Sheldon Steinbach, general counsel for the American Council on Education, which represents 1,800 colleges and universities. Steinbach said he reviewed the McCain language and agrees with the Bush campaign's interpretation.
''This would significantly reduce the incentive for a lot of people to contribute to charitable institutions,'' said Matthew Hamill, vice president for public policy at Independent Sector, representing 750 charities, foundations, and corporations.
McCain campaign officials said the senator has always favored tax deductions for gifts to charity. And they did not disagree with what the tax provision actually does.
''Wealthy Americans shouldn't get a tax write-off for contributing a fancy painting or an overvalued stock while middle-class Americans are in need of a tax cut,'' said Howard Opinsky, McCain's spokesman. ''It's just another example of Governor Bush protecting his wealthy donor base at the expense of the middle class.''
Opinsky said that by eliminating the deduction, McCain's plan would give 25,000 additional working-class people a tax cut.
Senator Pete Domenici, chairman of the Senate Budget Committee, and Senator Judd Gregg, the New Hampshire Republican, are expected to dissect McCain's tax plan today during a news conference in Manchester.
McCain proposes cutting taxes by $237 billion over five years. He says it is irresponsible to cut taxes further until the financial future of Social Security and Medicare is assured. He would also use money from the surplus to pay down the national debt.
Bush, on the other hand, would give a five-year, $483 billion tax cut. He says the only way to ensure the federal government does not spend any budget surplus is to refund most of the money to taxpayers.
With little time remaining until the Feb. 1 primary, the Bush campaign is intent on picking apart McCain's plan. They have also accused McCain of raising taxes by $40 billion by eliminating the tax deduction for employer-provided benefits, such as life insurance, tuition, parking, and fitness memberships. McCain, however, has said he would deprive corporations from getting a tax deduction for club memberships and free parking, but not for health insurance premiums or tuition assistance.
