Obama's Latest Veto Threat Is Aimed at a Bill That Encourages Charitable Giving

The House voted Thursday to create a permanent tax break for people and companies that donate food and money to charity.

But the White House says President Barack Obama would veto the bill — not because of what's in it, but because the bill doesn't include other tax provisions that the White House supports.

President Barack Obama has threatened to veto a House-passed bill aimed at giving people an incentive to donate food and money to charity. Image: Bloomberg/Bloomberg via Getty Images

The House ignored that veto threat Thursday afternoon, and approved it in a 279-137 vote, with help from 39 Democrats. That vote is barely a veto-proof majority, although more than a dozen members didn't vote.

Still, opposition from the White House is putting most Democrats in the somewhat awkward position of opposing charitable tax breaks that they've supported in past years, simply because the bill doesn't also extend the earned income tax credit or other tax policies they support.

The White House issued its veto threat on Tuesday, and made it clear that it opposes the bill not for what it does, but for what it doesn't do.

"House Republicans are making clear their priorities by rushing to make these tax cuts permanent without offsets when key tax credit improvements benefiting 16 million working families with children are scheduled to expire," the White House said. Some House Democrats made the some point during debate on the bill — that it's not fair to extend some charity-related tax breaks but not others.

House Majority Leader Kevin McCarthy (R-Calif.) expressed disbelief on the House floor that Democrats would oppose a bill to boost charitable giving for this reason.

"Seriously?" he asked on the House floor. "That's just wrong."

As the White House statement indicated, Democrats are also upset that the bill would not find new tax revenue to make up for the revenue lost by making the tax break permanent. But Republicans dismissed that argument by saying these sorts of tax breaks are usually extended each year, and neither Republicans nor Democrats ever ask for a way to offset the lost revenue.

According to the Congressional Budget Office, the bill would increase the national debt by about $2.2 billion over the next decade, or about $220 million per year. Republicans say making the extensions permanent, and without an offset, simply reflects the reality of what's happening anyway on an annual basis, and gives companies more certainty about the tax code going forward.

House Ways & Means Committee Chairman Paul Ryan (R-Wis.) said he thinks Democrats were just using the debate to argue for more tax hikes. He interpreted Democrats as saying, "We like this policy, we think there's a need, we just want to raise taxes."

Ryan described the bill as one that would make three permanent changes to the tax code to encourage charitable giving. "Number one, it would encourage charitable giving," he said. "Number two, it would help let people contribute to charities from their… individual retirement accounts tax free."

"Number three, it would let people deduct food bank donations from their taxes, and it would make other changes that make giving less expensive," he said.

According to a committee report, the bill recognizes that restaurants that might donate food will have to incur costs to keep that food packaged and either refrigerated or frozen before it's donated. That report said the bill "encourages food-service companies to incur and offset these costs through the enhanced deduction."

But one Democrat, Rep. Xavier Becerra (D-Calif.), argued that these sorts of tax breaks would mostly go to "wealthy folks," and said for that reason the bill should somehow make up for the government's lost revenue.