12 January 2018

ACR News 1.12.18 – Tax Work Continues While States Get Creative

>> Federal: Washington Roundup
>> Federal: No Budget, No Reconciliation
>> Federal: Chairman Hatch Announces Retirement
>> Federal: New Tax Writers and Subcommittee Chairs
>> Federal: State-level SALT Workarounds
>> Federal: ACR Summit for Leaders
>> Consider This: Tax Work Continues
>> Top Reads: Charities trying to gauge impact of federal tax reform on giving

Washington Roundup

This week, the House and Senate returned to Washington to one big to-do item: fund the federal government past January 19. You may recall, back in December, lawmakers punted the spending fight for a third time. Now, reports suggest they could again pass a short-term deal in order to make time to come to an agreement on immigration. Though it’s unlikely, if lawmakers don’t come to a short-term or long-term agreement by next Friday, the government could shut down.

No Budget, No Reconciliation

Last weekend, President Trump hosted GOP Congressional leaders at Camp David to discuss the 2018 agenda. Part of those discussions was the possibility of bypassing a budget agreement this year, which would forfeit the reconciliation tool that allows legislation to be passed by a simple majority in the Senate.

Senate Majority Leader Mitch McConnell (R-KY) indicated he wants to work on bipartisan legislation this year, while House Speaker Paul Ryan (R-WI) wants to address welfare reform, which would likely be Republican-only. No budget deal likely means no welfare reform and fewer wins for House Republicans.

Chairman Hatch Announces Retirement

On Tuesday, January 2, Senate Finance Chairman Orrin Hatch (R-UT) announced his retirement at the end of his term this year. Chairman Hatch has been a staunch supporter of the nonprofit sector, and his leadership will be missed.

His retirement has sparked speculation around who will take the top spot on the Finance Committee once he departs. Sens. Chuck Grassley (R-IA) and Mike Crapo (R-ID) are first and second in line to become chairman, respectively, but both currently chair other panels. And while we consider it unlikely at this point, control of the Senate could flip, in which case we would expect Sen. Wyden (D-OR) to take over as chair. Stay tuned for updates later this year.

New Tax Writers and Subcommittee Chairs

This week, the House and Senate tax writing committees had some shuffling to do. Democrats added Sen. Sheldon Whitehouse (D-RI) to the Finance Committee, bringing the ratio of Republicans to Democrats to 14-13.

On the House Ways and Means Committee, Rep. Darin LaHood (R-IL) replaced retiring Rep. Pat Tiberi (R-OH); Rep. Vern Buchanan (R-FL) took over the chairmanship of the tax policy subcommittee; Rep. Peter Roskam (R-IL) took over the health subcommittee; and Rep. Lynn Jenkins (R-KS) now heads the oversight panel.

State-level SALT Workarounds

On Thursday, January 4, a leader in the California Senate introduced legislation that would allow taxpayers to make a charitable donation to the California Excellence Fund instead of paying certain state taxes. They could then deduct that contribution from their federal taxable income as a charitable deduction.

The bill is meant to circumvent the new federal tax law that caps the state and local property and income tax deduction (SALT) at $10,000, and it would essentially allow Californians who itemize their taxes to deduct much more than $10,000.

Several states have said they are looking for ways to work around the new federal tax code limits, and if it works in California, other states could use a similar model to expand tax savings.  It remains to be seen how the Congress and/or Administration will respond to these efforts.

ACR Summit for Leaders

Last year, Congress passed the first comprehensive tax reform legislation in over three decades – and it will have a profound effect on our sector. What does this new law mean for charities? And where does the sector go from here? We’ll examine those questions and other topics at the ACR Summit for Leaders, which will be held as part of United Philanthropy Forum’s Foundations on the Hill. Programming features leaders in philanthropy, policy experts, and congressional staff.

We invite you to join us to get the insider’s view of Congress and learn about what we can do to protect private giving and educate lawmakers about the critical role of charitable organizations in a free society. If you are unfamiliar with the ACR Summit for Leaders, we encourage you to review what we discussed last year.

Registration: Detailed programming will be announced in the near future. To register for the ACR Summit as well as other events of Foundations on the Hill, click here. Attendance at the ACR Summit is free of charge.

Consider This – Tax Work Continues

With passage of the massive tax bill in December, some think action and talk on taxes will die down this year.

Far from it. Whenever a bill the size and scope of the Tax Cuts and Jobs Act is passed as quickly as it was, problems almost immediately begin to emerge with the drafting. And figuring out a way to fix those problems will be no easy task. Getting agreement in the Senate on what are known as “technical corrections” will require 60 votes. Democrats who felt shut out of the tax bill process (not a single Democrat in the House or Senate voted for the bill) are in no mood – at least for the time being – to help fix the bill.

We’ll also be looking for ways to advance our sector throughout the year in the tax space. While getting a universal charitable deduction passed this year is most certainly a heavy lift, we will continue working with Congressman Walker (R-NC) and Senator Lankford (R-OK) to advance their bills to do just that.

And finally, with Chairman Hatch (R-UT) retiring and a slew of Republican retirements on the House Ways and Means Committee, we can expect a lot of work on “legacy” issues in the tax space (and the health space). Bottom line, tax will be very much on the congressional radar in 2018.

Top Reads

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