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>> Federal: There’s More Than Just the Charitable Deduction: CHARITY Act and PF Excise Tax Simplification 
>> Federal: Champions for Charity and Submission to Chairman Hatch
>> Federal: Webinar Recap: Potential Revenue Raisers in Tax Reform 
>> Federal: Roadmap for Action – August
>> Consider This: Stuck in the Moment
>> Top ReadsAmericans gave $390 billion to charity last year

Washington Roundup

The focus in Washington remains on health care, and tax wonks are patiently waiting their turn to be the center of attention.

Last week, it seemed there was no path forward on health care for the Senate, even as Senate Majority Leader Mitch McConnell (R-KY) gave Republicans a repeal-only option. But this week, Republicans in the upper chamber seemed to have developed a working strategy. By a slim margin, 50 Senate Republicans, and Vice President Pence, passed a procedural vote on Tuesday that opened debate on a health care bill.

As lawmakers began to pack up preparing to leave for August recess, Senators debated a “skinny bill” that would repeal 3 big pieces of the Affordable Care Act — the employee and employer mandates and the medical device tax, but it wasn’t enough. Early this morning, the legislation failed to pass with the support of only 49 senators. Passage would have set up a conference committee with the House to meld the two bills together. Now, the path forward is unclear. Republican lawmakers could try again, or they could move on to other priorities.

Bottom line.  The longer lawmakers take to figure it out, the longer it will take them to tackle tax reform.

Also ahead of tax reform is the FY18 budget resolution, which will include reconciliation instructions. These instructions are important as they would allow Republicans to pass tax reform without Democratic support. Last week, the House Budget Committee passed a budget resolution out of their committee, which is the first of many steps to pass the FY18 budget. However, the House isn’t expected to vote on the budget until after the August recess.  The Senate has yet to act.

Tax Reform 

Ahead of the August recess, Republican leadership is preparing their members to make the case to their constituents about the need for tax reform and what it could mean to them. The good news for them is that the climate is favorable. According to a Politico/Morning Consult poll, public support for tax reform has grown.

To help sell tax reform, House Speaker Paul Ryan (R-WI) told reporters that the Senate, House and White House were soon planning to release joint principles for tax reform before the recess. So expectations were high this week.

What we received was a joint statement from the House, Senate and White House, laying out a broad position on tax reform. Many were disappointed that after months of House/Senate/White House meetings there wasn’t more.  That said, the statement did declare dead the controversial Border Adjustable Tax, which Speaker Ryan and Ways and Means Chairman Kevin Brady (R-TX) had been promoting for months.

Of note, the fate of the charitable deduction was not mentioned in the statement.

Meanwhile, the Treasury Department, which is expected to lead tax reform efforts for the Administration, still has several empty positions. Two of the key nominees for these positions completed their confirmation hearings last week: David Kautter to be Assistant Treasury Secretary for Tax Policy and Chris Campbell to be Assistant Treasury Secretary for Financial Institutions (Senator Hatch’s former Chief of Staff at the Finance Committee). If confirmed by the Senate, both Kautter and Campbell are expected to play significant roles in the tax reform process.

For those of you who can’t get enough of the palace intrigue around tax reform, this article is meant for you.

There’s More Than Just the Charitable Deduction: CHARITY Act and PF Excise Tax Simplification 

In June, Senators John Thune (R-SD) and Bob Casey (D-PA) introduced S. 1343 – the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act – which includes three provisions strongly supported by the Alliance for Charitable Reform: a flat one-percent private foundation excise tax, an expansion of the IRA rollover to include distributions to donor-advised funds (DAFs), and a sense of the Senate urging Congress not to diminish the charitable deduction during tax reform.

Senate Finance Ranking Member Ron Wyden (D-OR) and Senate Finance Member Pat Roberts (R-KS) are original cosponsors of the legislation, and other cosponsors include Senators Jerry Moran (R-KS), Joe Donnelly (D-IN), Gary Peters (D-MI), Amy Klobuchar (D-MN), Rob Portman (R-OH), Debbie Stabenow (D-MI), and John Boozman (R-AR).

In May, Reps. Erik Paulsen (R-MN) and Danny Davis (D-IL) introduced H.R. 2386 – the Private Foundation Excise Tax Simplification Act – which streamlines the PF excise tax to a flat one percent. The bill currently has 10 cosponsors in addition to the leads, including Reps. Pat Tiberi (R-OH), George Holding (R-NC), Richard Nolan (D-MN), Pat Meehan (R-PA), Kenny Marchant (R-TX), Jackie Walorski (R-IN), Tom Rice (R-SC), Mike Bishop (R-MI), Collin Peterson (D-MN), and Pete Sessions (R-TX).

The ACR team, along with colleagues in the sector, continues the search for cosponsors on these important pieces of legislation, and we’ll keep you updated as more cosponsors are added.

If you get a chance to speak with any of your lawmakers during August, please ask them to consider cosponsoring these pieces of legislation. Adding cosponsors to a bill shows growing support for it and signals to the House and Senate leadership that it’s a serious bill worthy of consideration for tax reform.

Champions for Charity and Submission to Chairman Hatch  

In April, the Trump Administration announced it would conduct listening sessions following the release of its outline on tax reform. Upon that announcement, ACR called on the Administration to invite the nonprofit sector in for one of those sessions. That request was fulfilled earlier this month when ACR hosted foundation and nonprofit leaders in D.C. for a two-day Champions for Charity event on July 12 and 13, which included a listening session with Vice President Mike Pence.

During the listening session, attendees discussed the issues facing the charitable sector, such as the potential effect of tax reform on charitable giving and ACR’s solution of a universal charitable deduction for all taxpayers. Several outlets published coverage of the two-day event and the universal charitable deduction that attendees advocated for. That coverage can be found here, here, here, here and here.

Following the listening session with VP Pence, ACR submitted a letter to Senate Finance Chairman Orrin Hatch (R-UT), in which we laid out the most important issues facing our organization in tax reform: the charitable deduction, the private foundation excise tax, and the DAF expansion of the IRA charitable rollover. A copy of our submission can be found here.

Webinar Recap: Potential Revenue Raisers in Tax Reform  

In 2014, then-Ways and Means Chairman Dave Camp (R-MI) unveiled the “Tax Reform Act of 2014,” which included proposals, some that would raise revenue from the charitable sector.  It is commonly referred to as the Camp Discussion Draft. Although the legislation never passed, the effects of the Camp draft are being felt today.

On Thursday, ACR hosted a 30-minute webinar on the potential implications the Camp Draft could have on tax reform this year. Sandra Swirski, executive director of ACR, was joined by Alex Reid, an ACR Advisory Council member and partner at Morgan Lewis, who gave an overview of the provisions in the Camp Draft that would affect charities, as well as a temperature of the likelihood of those provisions being included in a comprehensive tax reform bill this year.  Some of these provisions include lower AGI limits for charitable deductions, and a 2 percent floor on all charitable deductions, to name a few.

While these provisions were meant to be “conversation starters”, they could make their way into tax reform, and maybe without any public hearings to evaluate implications.

Here are the slides for the webinar.

You can listen to a recording of the webinar here.

Roadmap for Action – August  

At the ACR Summit for Leaders in March, we presented a Roadmap for Action – a 12-month plan to engage with lawmakers and your community. We then hosted a webinar in April for those who may have missed the Summit.

August’s action item is to attend a town hall with your Congressman and/or Senators when they are back in the district for the August recess. You can find all the resources you need here, which includes a sample question to ask at a town hall. Additionally, you can sign up for town hall alerts at townhallproject.com.

We also want to share in your successes! If you take a photo during your visit and you would like to share it with us, please email it to sbarba@urbanswirski.com. Some examples of how to share on social media can be found here.

Consider This – Stuck in the Moment

Remember that U2 song “Stuck in a moment you can’t get out of?” Washington is feeling a little like that these days.  Actually a lot like that.

On the domestic front, we’ve been talking about little else than what to do about Obamacare – for seven months and counting.  Even with last night’s dramatic vote on the “skinny bill,” it is still not clear where and when that debate ends. Indeed, earlier this month, former House Speaker Boehner (R-OH) had this to say: “Here we are, seven months into this year, and yet they’ve not passed this bill. Now, they’re never — they’re not going to repeal and replace Obamacare.”

We don’t know if the ex-Speaker is right.  However, we do know the debate on healthcare is taking up much of the oxygen in the room.  As a result, real progress on tax reform has slowed to a crawl.  Yes, there is a lot of talk about work being done behind the scenes on tax reform and some hearings on the Hill, but the healthcare debate has been a major diversion.

It still remains unclear where policymakers wind up on Obamacare, but we do know there is an urgency in Washington among Republicans to get the issue behind them.  They are anxious to get to doing the real work on tax reform and they are very intent on doing that in the fall.  And of course, we are working closely with the Hill and the Administration to make sure our priorities in that process are realized.

Top Reads

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