12 June 2015

ACR News 06.12.15 – Roadblocks for Tax Reform?

>> Federal: Washington Roundup
>> Federal: Finance Committee Sets New Working Group Deadline
>> Federal: Despite Roadblocks, Ryan Still Working on Tax Reform
>> Federal: Consider This: Donor-Advised Funds Changing Philanthropy
>> Top Reads: NAB report: Charity Giving Has Slowed

Washington Roundup

Congress returned to Washington last week, following their Memorial Day recess. The Senate passed the USA Freedom Act – which reformed and extended certain expiring provisions of the Patriot Act focusing on data collection and surveillance – and began consideration of the National Defense Authorization Act.

The House began debate on several appropriations bills, which would allocate funds to specific federal agencies according to the budget agreement reached earlier this year. The House is also considering trade legislation that would give President Obama expedited authority to negotiate international trade agreements. Votes on the trade legislation are expected later today, but the fate of the bills remains uncertain as of this writing.

Finance Committee Sets New Working Group Deadline

Earlier this week Senate Finance Chairman Orrin Hatch (R-UT) announced that the Committee’s tax reform working groups have until June 26 to submit their final reports. The original deadline was May 31.

While details about these reports are scarce at this time, we understand that the co-chairs have generally agreed that the reports will be limited to areas of consensus (i.e., content must be agreed upon by both Democrats and Republicans). Additionally, each group’s co-chairs will decide how to roll out their report and no two reports will necessarily be in the same format. While some are hoping the final products will provide a strong jumping off point for tax reform, that remains to be seen.

As of now, we are not expecting the groups that have jurisdiction over the sector’s issues – the Individual and Business groups – to submit any damaging proposals. We are, of course, monitoring their progress.

Despite Roadblocks, Ryan Still Working on Tax Reform

On Monday, Senate Majority Leader Mitch McConnell (R-KY) said in an interview, “We’re certainly not going to be able to be doing big, comprehensive tax reform with this president. The president is not interested in revenue neutrality, and he’s not interested in treating all taxpayers the same, so I don’t think we’ll get there on comprehensive.”

You may recall that in May, House Ways and Means Committee Chairman Paul Ryan (R-WI) conceded that comprehensive reform could be “a 2017 project” with a potential “down payment” in the short term. Chairman Ryan reiterated his commitment this week to at least some elements of tax reform this year. Discussing areas of common ground with Democrats on Wednesday, Chairman Ryan said, “The question is: Can we take a couple of steps in the right direction, particularly with international tax laws and international tax rules? Ours are really anti-competitive. Can we do some things to fix that so we can make American businesses more competitive?” We understand from Ways and Means staff that Chairman Ryan is being true to his word and has directed Committee staff to explore options for international reform on a bipartisan basis.

A path forward for other tax-related items in the House, such as tax extenders like the IRA charitable rollover, is not clear at this time.

Consider This: Donor-Advised Funds Changing Philanthropy

Next week, the Urban Institute is hosting a conference titled, “Donor-Advised Funds: How Have They Changed Philanthropy?” What do we hope we will hear?

Well for starters, we’d like to hear about the wide variety of prompts for people creating donor-advised funds (DAFs) – sharing their good fortune, remembering a signature life event, encouraging their children and grandchildren to give – all without the administrative burdens that come with setting up a charity or a foundation.

DAFs make it easy for families to transmit values and teach younger family members how to engage in thoughtful and creative giving. Over 1,000 organizations in the U.S., with over $50 billion in charitable assets, offer DAFs, so there is much in the way of choice.

We hope to hear that DAFs expedite giving. DAFs are now the country’s fastest growing philanthropic vehicle because of the ease and convenience they provide to small and large donors alike. The National Philanthropic Trust reports that the overall payout rate for DAFs in 2013 was 21.5 percent. That figure is considerably higher than the five percent mandatory payout for private foundations.

And we’d like to hear that DAFs aren’t just for rich people. The research shows they are bringing the convenience of professionalized giving to middle-class givers.

Those are the kind of takeaways we are hoping will come from the Urban Institute’s event.  We will, of course, keep you posted.

Top Reads

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