to go over your statement very carefully and attempt to take into account the issues you have raised. Mr. BRUMLEY. Yes, sir. Senator ARMSTRONG. Mr. Moorhead, I want to ask one question that goes back to some testimony this morning from the Treasury. They make the observation that to really be fair this legislation should be broadened to permit tax-exempt organizations to invest in all passive investments. In effect, they say why single out this one group of investments. What do you say to that? Should we broaden the bill? Mr. MOORHEAD. I was somewhat dismayed to read that testimony this morning. And I am not an expert on many aspects of tax, but it seems to me to be a complete non-sequitor that because there is an established industry pattern in the oil and gas business to the effect that the traditional most common way of investing is through limited partnerships which own working interest, to then say that all other industries should be allowed the same access. There is a tremendous difference. Well it really comes back to the point I tried to make earlier. It is possible today for a tax-exempt institution to invest in oil and gas ventures of any and every kind, but they may not do so through the established industry conventional formats. They have to do so through sort of jury-rigged schemes. I was looking through the Stanger Register which lists and enumerates all of the publicly registered programs. There are 30-odd programs set forth there in summary of their terms, and two of them are designed, by virtue of carving out of a working interest in net profits interest, to allow participation by an exempt institution. However, the tax aspects of an investment so carved out are not attractive or not as attractive to the conventional taxpaying investor. So you have to make a choice if you are an institution to either stay out of this business, incur the unrelated business taxable income if you want to get in it, or though you want to be in a conventional public deal, to go on a tax avoidance design deal. Those are the three alternatives. And it makes no sense to meTreasury's line makes no sense to me to say that because you have an established thing in one industry, you should make it available for all the industries where it is not an established practice. I think they did it to push the argument, sort of ad absurdum, but I don't know their motive. Senator ARMSTRONG. Thank you. I appreciate your observations. Thank you all. We will be doing some more work on this, and we are very grateful for your input. Mr. MOORHEAD. Thank you for the opportunity, Senator. [Whereupon, at 2:45 p.m., the hearing was concluded.] [By direction of the chairman the following communications were made a part of the hearing record:] AHA American Hospital Association 444 North Capitol Street N.W. Washington D.C. 20001 STATEMENT OF THE AMERICAN HOSPITAL ASSOCIATION S.1167 AND S.1579/VOLUNTEER MILEAGE DEDUCTION August 15, 1983 The American Hospital Association, which represents over 6,300 hospitals and other health care institutions as well as more than 35,000 personal members, is pleased to have this opportunity to comment on S.1167 and S.1579. These bills would entitle volunteers who use their automobiles for charitable purposes to a tax deduction at the standard business-use rate or the reimbursement level that federal government employees receive for official use of their automobiles. The rate for business and government employees is currently 20 cents per mile, while the mileage deduction for volunteers is only 9 cents per mile. We wish to express strong support for both S.1167 introduced by Senator Durenberger, and S.1579, introduced by Senator Armstrong. Hospitals rely heavily on the services of over 5 million individuals who donate their time and energies for important volunteer work. These bills would significantly benefit those individuals and the institutions they serve by allowing volunteers, if they itemize their personal deductions, a reasonable deduction for travel expenses incurred in aiding these institutions. Such a change would both help to ensure the continued provision of valuable volunteer activities and provide incentives for more persons to volunteer. Importance of Volunteers Throughout the history of the United States, charitable contributions, both in money and kind, have been vital to the health care system. Contributions have reflected and fostered a highly desirable participatory attitude by individuals toward the health needs of their communities. Direct contributions have enabled hospitals to: replace obsolete facilities and equipment; conduct research and educational activities; maintain and improve community health care through subsidization of the cost of providing care to indigent patients; and develop and finance innovative approaches to health care delivery. In addition, direct philanthropic support reduces the financial burden on government. For example, it has become clear that diminishing charitable support for hospitals in some urban areas has decreased their ability to maintain important patient care services. The plight of these financially distressed hospitals is now a major concern of the hospital field and the Congress. Private charitable and governmental activities in the health care field--often addressing different but related public needs and problems--are complimentary expressions of support for better health for the people of the nation. We believe the maintenance of this balance is important to the stability and improvement of the health care system. In much the same way that philanthropic contributions complement other sources of health care financing, volunteer services complement the services provided by health care personnel. Volunteers perform services that humanize the hospital environment. They read to children and write letters for elderly patients. They also comfort patients and their families in emergency, recovery, and intensive care waiting rooms. Volunteer services are often a part of physical therapy and psychological support programs. In addition, these services have allowed hospitals to expand patient education activities related to nutrition, exercise, and natural childbirth. By escorting patients, bringing needed items to patients' rooms, and staffing gift shops, volunteers make hospital care more personal. As patient visitors, they frequently bring patients' problems or special needs to the attention of appropriate hospital personnel. In the community, volunteers participate in health promotion and disease prevention efforts by distributing printed materials and videotapes that provide information on diseases and such risks as smoking or alcohol abuse. They also deliver hot meals to the homes of elderly and indigent citizens through the "Meals on Wheels" program. Recently, volunteers have begun community outreach programs that include health screening and referral services. If volunteer activities were to decline, many worthwhile programs would be deprived of much needed support and might cease. Another extremely helpful volunteer service that benefits both patients and the government by preventing possible costly errors is assistance for patients who must file third-party reimbursement forms. In programs providing such assistance, a volunteer usually meets with a patient during admission to explain reimbursement procedures and may assist in completing forms prior to discharge. Burden on Volunteers The American Automobile Association has estimated the total cost of driving a car to be over 23 cents per mile. Other estimates range as high as 50 cents per mile. However, the volunteer mileage deduction, which became law in 1958 at 7 cents per mile, currently remains at 9 cents contrasted with the deduction of 20 cents per mile for business and government use. In 1958, gasoline 29 cents per gallon and oil was 15 cents per quart. Today, gasoline costs have skyrocketed to over $1 per gallon and oil exceeds $1 per quart. The present low rate of reimbursement in no way approximates the cost of fuel and maintenance required to operate an automobile. The increasing cost of operating an automobile is a growing burden for persons who devote their personal resources to the performance of volunteer activities. In the interest of both local and national efforts to address community needs through private initiative, it is entirely appropriate to continue encouragement of charitable work through federal tax policy. To do so requires that the mileage deduction available to charitable volunteers |