The news out of Capitol Hill has been dominated by stories about tax cuts, the budget surplus and how to use the latter to pay for the former. Both parties, indeed, different factions of both parties in the House and the Senate, have wildly different views. In an attempt to find something that everyone can agree on, here is a modest proposal.

For 30 years the federal government has imposed an excise tax on foundations, somehow figuring that private philanthropy should be taxed for the privilege of assisting the government in meeting society's needs.

Back in 1969, when the tax became law, it was to have been used to pay for oversight and enforcement activities. In fact, that has never been the case; the money generated simply becomes a general revenue stream for the Treasury. In fact, in 1997 that tax raised almost $500 million, all of which now might be counted as part of the budget surplus.

This excise tax amounts to one percent of investment income for foundations that distribute an amount equal to at least 5 percent of their net assets each year. For foundations that distribute less, the tax is 2 percent.

In order to make this a win-win situation for everyone, under my proposal, foundations would have to add to their giving an amount equal to the taxes they would have paid under current law. If they fail that test, they would be subject to the 2 percent federal tax. It is hard to imagine any foundation that would not jump at this opportunity.

The result? A net increase in charitable giving of a half-billion dollars; a slight decrease in the budget surplus and a positive incentive for the private sector. All of this could come at the time that budget caps on domestic spending are actually threatening federal spending on the very programs that are most likely to benefit from an increase in foundation spending.

When the law was enacted in 1969, the nation was in the throes of social unrest and a deficit created by the Vietnam War. The tax was in some ways punitive, reflecting Congress's unhappiness over the funding of some programs and the appearance of some alleged golden-parachute arrangements with former officers. In comparison with public and private-sector personnel actions in the late 1990s, these arrangements look tame.

In the intervening years, regulation of all nonprofits has been tightened, public disclosure of all types has been improved by electronic means, and as a nation we have put the scars of the '60s and '70s behind us. Terminating this unwarranted tax, freeing resources and continuing to build our social safety net, would seem more important today than simply adding to the federal surplus.

The writer is president of the nonprofit Council for Basic Education.