Veto of Bill Concerning Unlimited Income Tax Deductions for Certain Contributions to Charity.

To the House of Representatives:

I return herewith, without my approval, H.R. 6779 entitled "An Act To amend section 170 of the Internal Revenue Code of 1954 (relating to the unlimited deduction for charitable contributions for certain individuals) ."

Existing law allows a taxpayer an unlimited deduction for charitable contributions if the sum of his contributions and federal income tax payments in the taxable year and in each of eight of the ten preceding taxable years exceeds 90 percent of his taxable income.

H.R. 6779 would provide that under certain circumstances the 90 percent test shall be considered satisfied in each of two consecutive years if the sum of the contributions and income tax payments for the two consecutive years exceeds 90 percent of the combined taxable income for such two years. The bill is a temporary measure without effect after the 1968 taxable year. It would also apply retroactively to taxable years beginning after December 31, 1956.

Nothing appears in the record on this bill that would justify a departure from the general rule that changes in the tax laws should apply only prospectively. In actual fact, the retroactive feature of this bill is highly discriminatory. Some taxpayers could avoid an otherwise assessable deficiency for 1957, 1958 or 1959 by using the bill's benefits to amend incorrect returns for those years, but other taxpayers who filed correct returns could not avail themselves of the bill's benefits to claim a refund for those years.

Although unable to approve this bill, I would be willing to sign new legislation provided it applied only prospectively and were truly designed to encourage substantial gifts to educational institutions and other recognized public charities.

DWIGHT D, EISENHOWER