Fund proposed by Meriden lawmaker would seek private donations for social services



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As lawmakers consider responses to federal tax changes, State Sen. Len Suzio is again pushing for the creation of social service fund that would accept donations in exchange for a tax break. 

The “Citizens in Need Fund” would be used to fund social services in the state budget, and allow contributors to deduct the donations, at a rate of 200-percent, from their taxable income. 

“I think the state’s financial condition is so dire, and I think the federal tax changes are so significant in their implications, and this addresses both those issues at the same time,” Suzio, R-Meriden, said.

The bill was part of public hearing Friday before the legislature’s Finance, Revenue, and Bonding Committee. 

A similar bill last year was converted into a study. 

The federal tax changes raised the standard deduction and is expected to significantly reduce the number of people who  itemize deductions.

In February, Gov. Dannel P. Malloy recommended allowing towns to set up charities to support local services. 

Jared Walczak, senior analyst with the Tax Foundation, warned in January that many proposed end-arounds wouldn’t work because federal tax code requires charitable intent for a contribution to be tax-deductible. 

He said the Internal Revenue Service would consider state services to be a benefit and not allow contributions to the general budget. Suzio said his fund would essentially function as a charity, taking contributions to pay for social services. 

Gian-Carl Casa, president of the Connecticut Community Nonprofit Alliance, raised concern that the bill would hurt existing charities. Charitable contributions cannot be used to further reduce what is taxable under state law, meaning Suzio’s fund would be the only donation offering a benefit against state taxes. 

“One of the concerns with this bill is that this gives the fund that it would set up an advantage over other kinds of charities that have to be out fundraising,” Casa said. He said nonprofits would be forced to compete for donations. 

Suzio and Casa talk more about the account in a recent episode of the Morning Record, the Record-Journal’s daily news podcast. The episode can be heard at http://bit.ly/2Ixf1EU 

msavino@record-journal.com

203-317-2266

Twitter: @reporter_savino



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