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American Red Cross

Dear Mr. Chairman:

Office of the President

National Headquarters
Washington, D.C. 20006

August 18, 1983

The American Red Cross and its 1.4 million volunteers strongly support and urge the passage of S. 1167 or S. 1579. The former bill would amend the Internal Revenue Code of 1954 to provide that the amount of the charitable deduction for expenses incurred in the operation of a motor vehicle will be determined in the same manner Government employees determine reimbursement for the use of their vehicles on Government business. S. 1579 would amend the Code to allow the deduction to be computed at the same standard mileage rate used in computing the business expense deduction.

The present mileage rate of 9¢ per mile allowed volunteers as compared to 20.5¢ per mile allowed Government employees and 20¢ per mile allowed business persons is grossly unfair.

For example, a Red Cross volunteer working in a hospital is allowed only 9¢ per mile to drive to and from the hospital while a salesperson calling upon the same hospital to sell medical equipment or supplies is allowed 20¢ per mile.

To cite another inequity, a Red Cross volunteer working at the scene of a disaster is allowed only 9¢ per mile to drive to and from the scene while an employee of the Federal Emergency Management Agency is allowed 20.5¢ per mile and an insurance adjuster is allowed 20¢ per mile to drive to and from the same scene.

Obviously, volunteers incur the same expense in using their personal automobiles in their charitable work as Government employees and business persons incur in using theirs in their work. Yet volunteers who give freely and generously of their time, their experience, and their compassion to help and comfort their less fortunate fellow citizens, are needlessly penalized by this unrealistic mileage allowance.

In testifying before the Subcommittee on Taxation and Debt

Management on April 23, 1982, on S. 473 dealing with the automobile mileage allowance permitted for purposes of computing the charitable contribution, Deputy Assistant Secretary of the Treasury Department, David G. Glickman, said the Treasury Department opposed increasing the mileage allowance granted to volunteers. He stated, in part:

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The difference in the two rates results from the
fact that the standard mileage rate permitted for
purposes of the charitable contribution... reflects
an allowance for gas and oil, that is, the expenses
directly incurred in performing the charitable service...
On the other hand, the standard mileage rate for
business use of an automobile reflects an additional
allowance for depreciation, insurance, general
repairs and maintenance, and registration fee.
believe this difference is justifiable."


The American Red Cross does not believe this difference is justifiable. Moreover, many of our chapters report that this inequitable allowance granted by the Treasury Department is having an adverse effect upon the recruitment and retention of volunteers.

One wonders why a personal automobile depreciates when used for official government business or for business purposes, but not when driven by a Red Cross volunteer to a hospital, a blood donation site, a disaster shelter site, or a safety training program. One also wonders why a volunteer should not be granted a mileage allowance that includes a proportinate share of insurance premiums, as are Government employees and business persons.

To sum up, the IRS ruling is inequitable, unfair, and illogical. In these times of high gasoline prices, the ruling is imposing grave hardships upon volunteers, most of whom are persons of moderate means, on whom increasing reliance is being placed to meet pressing human service needs.

On behalf of its 1.4 million service volunteers working out of 3,000 chapters nationwide, the American Red Cross supports and urges passage of S. 1167 or S. 1579.

We request that this letter be incorporated in the record of the hearing on these bills held by the Subcommittee on Taxation and Debt Management on August 1, 1983.

The Honorable Robert Dole

Senate Committee on Finance
United States Senate
Washington, D.C. 20510

Sincerely submitted,

Polard F. Schubert

Richard F. Schubert

Comments on S. 108, Tax Credit for Vocational Education

The American Society for Training and Development

The American Society for Training and Development is pleased to make comment on S. 108 on providing a tax credit for certain vocational education programs since our society represents those professionals in the workplace who primarily administer employer education and training programs and are the ultimate consumers of the vocational education product. We have nearly 50,000 members in our national organization and in the 138 chapters throughout the country. Our members provide extensive human resource development services from remedial basic education for entry-level employees to on-going job skill development for millions of employees to cope with the ever-changing needs of the workplace.

We support federal legislation like S. 108 which encourages collaboration between vocational education institutions and the private sector. We like the idea of tax incentives for employers to participate in personnel exchange programs for sharing specialized human resources for planning and instructional purposes. Some of the positive outcomes of giving employers tax incentives to collaborate with vocational education institutions include higher proficiency and achievement in training skills and knowledge; more realistic job and career expectations of students when they enter the world of work; and more efficient investment of both public and private resources.



Statement To
Subcommittee On Taxation and
Debt Management

Senate Finance Committee
August 1, 1983


Norman A. Sugarman
Washington, D.C.


My name is Norman A. Sugarman. I am a partner in the law firm of Baker & Hostetler. I formerly served as Assistant Commissioner of Internal Revenue. My duties included supervising the functions of the Internal Revenue Service with respect to tax-exempt organizations. In nearly 30 years of private practice I have worked with and advised many charitable organizations, both private foundations and public charities. I am co-author of a book published by the

American Law Institute-American Bar Association on the subject "Tax Exempt Charitable Organizations."


This statement is focused on Internal Revenue Code S 4943, as enacted in the Tax Reform Act of 1969. Section 4943 puts the IRS in the business of regulating, and in some cases forcing the divestiture of, holdings of private foundations in business enterprises. In my experience, this is the most troublesome from both policy and practical viewpoints of all the tax provisions affecting the role of charities.

The initial impetus for the enactment of S 4943 was the "Treasury Department Report on Private Foundations" issued in 1965. The Report concluded that the preponderant numbe of private foundations operated without tax abuse, but it did provide illustrations of alleged "serious faults among a minority of such organizations." Under the headings of "Foundation Involvement in Business" and "Family Use of Foundations to Control Corporate and Other Property", the Report sought to identify certain problem areas related to foundation ownership of an interest in a business enterprise. These concluded that such businesses are free from

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