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>> Federal: Senate Finance Committee Hearing on Individual Tax Reform
>> Federal: Tax Reform and Philanthropy’s 3 Percent Solution
>> Federal: Faith and Giving Coalition Briefing
>> Federal: Roadmap for Action – September
>> Consider This: Congress is Back in Town
>> Top Reads: Nonprofits Fear Sting of Tax Reform
Last week, lawmakers returned to Washington following their month-long August recess. The expectation was that they would spend September negotiating a debt ceiling hike and passing a spending bill before government funding expires at the end of the month. However, last Wednesday, President Trump made a deal with Democratic leaders on a three-month extension of funding, as well as temporarily suspending the debt ceiling, all to be paired with disaster relief funding. The deal caught many by surprise, and both chambers passed the legislation on Friday, September 8.
With more bandwidth than expected for the rest of the month, Republicans could take one last shot at repealing the Affordable Care Act. In August, the Senate Parliamentarian ruled that the budget reconciliation instructions – which Republicans planned to use to repeal the ACA with a simple majority in the Senate – expire at the end of September. That gives Republicans a hard deadline to deal with health care and has spurred some of them to draft “fixes” to the law, including one from Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA), and one from Senators Lamar Alexander (R-TN) and Patty Murray (D-WA). However, none have enough support to clear the upper chamber yet, and their time is running out.
The clock is ticking for Republicans to notch a big legislative win this year. So policymakers in the Senate, House and White House have hit the ground running on tax reform. Tax negotiators have been in constant contact, the President is pursuing bipartisanship, and the leaders of both tax writing committees are soliciting input from members – one by retreat and the other by hearing.
Last week, the “Big 6” tax negotiators – Senate Majority Leader Mitch McConnell (R-KY), Senate Finance Chairman Orrin Hatch (R-UT), House Speaker Paul Ryan (R-WI), House Ways and Means Chairman Kevin Brady (R-TX), Treasury Secretary Steve Mnuchin and National Economic Council Director Gary Cohn – met with President Trump to discuss tax reform and the White House reports the negotiators have come to consensus on many outstanding issues.
President Trump’s deal with Democrats indicated a willingness to work across the aisle for legislative wins, and he maintained that theme this week as he continued to court moderate Democrats. On Tuesday, the President hosted a dinner with Democratic and Republican senators at the White House to discuss tax reform. Then on Wednesday, he met with a group of bipartisan House members to continue the discussion. There was no reported mention of charitable tax provisions.
On Wednesday, Chairman Brady told Congressional Republicans to expect more details on a tax reform framework the last week of September, following a GOP Ways and Means retreat on September 24th and 25. This move is aimed to assuage rank-and-file Republicans who have grown increasingly frustrated that they haven’t seen more details on their party’s tax plan. Keep in mind, in order to pass tax reform with a simple majority in the Senate, Congress will need to pass a budget with reconciliation instructions, which is causing further discord.
On Thursday, Senate Finance Chairman Orrin Hatch (R-UT) held a hearing on Individual Tax Reform to “examine ways to streamline the individual tax system to make it work better for American individuals and families.” Tax provisions relevant to nonprofits were not mentioned, but both Chairman Hatch and Ranking Member Ron Wyden (D-OR) did emphasize the need to simplify the tax code and highlighted increasing the standard deduction to do so.
Chairman Hatch also announced on Wednesday he will hold a hearing on Business Tax Reform next Tuesday. We expect it to be largely focused on American competitiveness, but we will monitor the hearing for any mention of the nonprofit tax provisions.
In addition to comprehensive tax reform, lawmakers will have to address how to help hurricane victims in the coming months. You may recall back in 2005, following Hurricane Katrina, lawmakers passed a relief bill with several tax provisions to ease the recovery. After the South was recently hit by two devastating hurricanes, we expect lawmakers to do something similar.
One provision that could be taken from the 2005 playbook is softening AGI limits on tax-deductible charitable contributions to incentivize more charitable giving to organizations helping with hurricane relief. The Treasury estimated this change in 2005 spurred $11 billion in donations to charity. However, there isn’t a set timeline on the legislation this year, and Chairman Brady said he’s maintaining his focus on tax reform while lawmakers figure out what the affected states will need.
This week, The Philanthropy Roundtable’s President Adam Meyerson penned an op-ed about tax reform and the charitable deduction. In the piece, Meyerson advocates for a charitable deduction available to all taxpayers as a way to grow charitable giving to 3 percent of GDP and improve civil society. We shared this op-ed with members of the Senate Finance Committee before Thursday’s hearing, but it was not mentioned during questioning.
On Thursday, September 7, ACR staff joined the Faith and Giving Coalition for a briefing on faith-based giving in tax reform. The goal of the briefing was to engage faith-minded offices in the tax reform debate and educate them about the unintended consequences as well as possible solutions for the charitable sector in tax reform. As tax reform progresses and the F&G Coalition continues to educate staff, ACR will gladly participate.
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.
September’s action item is to request and attend in-district meetings with your Senators when they’re in recess from September 21-24. You can find all the resources you need here, which includes suggested materials to bring and answers to FAQs.
We also want to share in your successes! August’s action item was to attend a town hall with your Congressman and/or Senators when they were back in the district for recess. If you took a photo during your visit and you would like to share it with us, please email it to firstname.lastname@example.org. Some examples of how to share on social media can be found here.
Congress returned to town last week. And, in something of a surprise to all parties involved, actual legislative activity followed. We’ve been fielding several questions about just what the President throwing his hat in with Democratic Leaders Schumer and Pelosi on a short-term budget/debt ceiling deal means. So, here’s our perspective.
Last week’s legislative flurry resulted in a short-term, three month deal on a number of “must-do” items like raising the debt ceiling and funding the government. That three month deal was largely seen as a “win” for Democrats and is due to expire on December 8. Figuring out what to do after December 8, combined with the fallout from the hurricanes in the South, will mean a very busy fall.
And there is still some interest in doing something about the Affordable Care Act – but the question is what? There are Republican factions afoot in both the House and Senate debating over whether to scrap or fix it. Further complicating any progress on the health care front is the ruling by the Senate parliamentarian that the budget provision that allows for a health care bill to pass in the Senate with just 51, not 60, votes expires at the end of this month.
And of course, there is the ever-present elephant in the room. Just when are we going to get to tax reform in a meaningful way? And how are we going to get there?
Up until this point, we had been expecting a strictly partisan tax reform exercise. In a fiery late August speech in Missouri, President Trump encouraged voters to vote Democrats out of office who don’t support his efforts on that front. Now (at least for the time being) he’s playing nice with Democrats. The deal with Democratic leadership shows President Trump is more interested in getting wins than he is in staying within party lines (again, at least for the time being). It shows that he was anxious to take a swipe at the establishment wing of his party – a wing he most definitely feels has failed to have his back.
So do we expect a bipartisan tax reform exercise? Maybe, at some point, but we aren’t there yet. We expect House and Senate Republicans to work hard to exert control over tax reform and not lose the issue to the President and Democrats as they did in last week’s budget deal.
All signs point to supercharged activity on tax reform over the next few months. At the end of the day, it is hard to predict where we wind up when it comes to taxes. But we are working hard to make sure our sector’s voice is being heard.
- National: Community Foundation Presidents Oppose DAF Forced-Payout Proposal
- National:Nonprofit Leaders Strike Back at Suggestion of Time Limit on DAF Payouts
- National: Nonprofits Fear Sting of Tax Reform
- National: Hatch: Big-Six Tax Framework Won’t Dictate Finance Bill
- National: Mnuchin promises details on tax plan this month
- Opinion: Tax reform and philanthropy’s 3 percent solution
- Opinion: Congress, don’t tax giving: Charity helps people while saving government costs
- Opinion: Does Big Philanthropy Threaten Democracy? A Dialogue on The Givers
- Opinion: Foundation Presidents Defend Donor-Advised Funds—Is That the Best They Can Do?
- Local: Op-Ed: Individual Donors — The Engine That Drives American Charity
- ACR Blog: Discussing Philanthropic Freedom and The Givers
- ACR Blog: Nonprofits Offer Joint Response on DAFs to Senate Finance Committee
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