The Senate and House of Representatives are on recess this week. They will return to Washington next week for the last work period before the Memorial Day recess. Before leaving town, the House continued efforts to break the stalemate over the budget. The Freedom Caucus, a group of House Conservatives, wants to cut $30 billion from the 2015 bipartisan budget agreement levels and have stopped the chamber from advancing topline budget numbers. Meanwhile, the Senate continued work on their appropriations bills, but fell short of passing the Energy and Water appropriations bill due to opposition from Democrats to an amendment on the Iran nuclear deal. They are scheduled to reconsider the bill when they return next week.
As you may know, there are bills in both the House and Senate for which the charitable sector is actively seeking cosponsors. On the Senate side, Senator John Thune (R-SD) and Finance Committee Ranking Member Ron Wyden (D-OR) introduced the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act, S. 2750, in early April. The bill has five co-sponsors as of this writing, including Senators Rob Portman (R-OH), Pat Roberts (R-KS), Debbie Stabenow (D-MI), and Senator Gary Peters (D-MI). This bill would streamline the private foundation excise tax to one percent, expand the IRA charitable rollover to include distributions to donor-advised funds (DAFs), and would express the sense of the Senate that Congress should not diminish the scope and value of the charitable deduction during tax reform, among other charitable provisions. The sense of the Senate is similar in language to the 2014 Thune-Wyden Dear Colleague letter signed by 17 Republicans and 16 Democrats.
On the House side, the Grow Philanthropy Act (GPA), H.R. 4907, which is sponsored by Rep. George Holding (R-NC), expands the IRA charitable rollover to include distributions to DAFs, and the Private Foundation Excise Tax Simplification Act, H.R. 640, sponsored by Rep. Erik Paulsen (R-MN), streamlines the PF excise tax to a flat one percent;both bills remain top priorities for ACR. As of today, H.R. 4907 has 13 cosponsors and counting, while H.R. 640 has three due to a procedural rule. A conference report was filed for the bill back in February when it was included in the America Gives More Act. Once it passed the House, new cosponsors could not be added. We continue to discuss the bill with offices to raise awareness.
Last week, Senate Finance Committee Chairman Orrin Hatch (R-UT) held a hearing entitled “Navigating Business Tax Reform,” which examined options for simplifying the business tax code. Chairman Hatch raised his idea for a tax reform plan, known as corporate integration, which had support from one witness at the hearing. As you may recall, his plan would treat corporations like other pass-through entities, such as partnerships or LLCs, where only the shareholders pay taxes. There are concerns that tax-exempt shareholders of corporate securities would no longer be tax-exempt under the plan, and would have to pay taxes on the dividends or interest received from those securities. One witness, Dr. Eric Toder from the Urban-Brookings Tax Policy Center, cited the impact on tax-exempt organizations, saying that only about a quarter of dividends actually go to taxable shareholders, and the rest go to tax-exempt or foreign shareholders. He mentioned that this reality will have to be taken into careful consideration under a corporate integration plan.
Hatch is expected to release his plan in June and we expect the Chairman to hold hearings on corporate integration later this month as a way to lay the groundwork for the public release of his plan the following month. It is unclear whether the Chairman will carve out tax-exempt organizations but we will continue to monitor the issue.
The Republican primary process is all but wrapped up, as every candidate has withdrawn from the race except Donald Trump. Following a loss in Indiana, Senator Ted Cruz (R-TX) suspended his campaign, and less than 24 hours later, Governor John Kasich did the same. On the Democratic side, the race continues between Hillary Clinton and Senator Bernie Sanders (I-VT) after Senator Sanders pulled out a win in Indiana on May 3. Clinton still leads Sanders with 2,205 delegates to his 1,401, and she needs fewer than 200 delegates of the remaining 1,159 delegates to win the nomination. The next Democratic primary is in West Virginia on May 10.
This Presidential election cycle reminds us of the Dr. Seuss book, “Oh, the Places You’ll Go.” We’ve been through so much drama in so many places across the country, it is hard to believe we still have another seven months to go. Frankly, we don’t know about you but we’d love it if things calmed down some. Regrettably, we doubt that will be the case.
In this week’s big political news, Donald Trump became the “presumptive nominee” of the Republican Party. Both Senator Cruz (R-TX) and Governor Kasich (R-OH) suspended their campaigns. In the other race, Senator Bernie “Feel the Bern” Sanders (D-VT) vowed to carry on to the convention.
Just what does Donald Trump’s ascendancy mean for our sector? That is hard to know, although we expect the next several months to reveal much more. We do know that he talks a lot about his involvement in helping veterans and we applaud that work. Also, he did carve out the charitable deduction in his broad brush tax plan – an encouraging sign.
While we’re all running a little ragged with the political events of the year, we still can’t avert our eyes. We can imagine ourselves as the central character in another Seuss classic, “If I Ran the Circus.” At the Circus McGurkus, you’ll be lured into the world of the wink-hooded Hoodwink, terrified by the Spotted Atrocious, and dazzled by the daring feats of the great Sneelock. We’ll leave it to you to draw your own conclusion as to which of the Presidential candidates most resembles which character.
- National: It is Possible to be Too Well-Endowed?
- National: Is Taxing Harvard, Yale and Stanford the Answer to Rising College Costs?
- National: House Republicans Seek to Block IRS Collection of Nonprofit Donor Data
- National: American Charity
- National: The Entrepreneurial Benefits of Being Selfless
- Local: Could Democrats Cut a Deal On State Tax Deduction for Charitable Contributions?
- Local: Kean Jr.: Taxpayers Should Get a Bigger Break for Supporting N.J. Charities
- Local: Volunteers in Medicine Recognized by Philanthropy Almanac
- Opinion: Limits on the Life Spans of Foundation Endowments Make No Sense
- Opinion: Fellow Billionaires: Let’s Listen to the Poor
- Opinion: Fear of N.G.O.s, in Beijing and Beyond
- ACR Blog: Donor Privacy Court Ruling in California
Please feel free to email us at email@example.com if you have any questions, stories or topics you would like us to include in our newsletter.
Looking for ARCHIVES of this newsletter? Click here.