Friday, May 23, 2014
On May 20th, Congressman Erik Paulsen (R-MN-3) introduced H.R. 4691, a bill that would simplify the private foundation excise tax to a flat rate of 1 percent—a position the Council has long supported. The bill is co-sponsored by Congressman Danny Davis (D-IL-7). Council President and CEO, Vikki Spruill, made the following statement in support of this important legislation:
"The Council applauds Congressman Paulsen for recognizing the importance of simplifying the private foundation excise tax. This bill echoes the excise tax simplification proposed by Chairman Camp in his comprehensive tax reform proposal, a provision which the Council strongly supports."
The single, flat rate of 1 percent will greatly simplify compliance for private foundations, improve efficiencies, and remove grantmaking disincentives. Private foundations dedicate valuable time and resources to managing the complex, two-tiered tax—resources that would be better spent addressing the needs of communities across America. And, the tax can actually serve to disincentivize increased grantmaking in a calendar year. Any increase in annual giving, relative to a foundation’s assets, will increase the five-year average payout used to calculate the tax liability. This is particularly devastating when late-year emergencies or disasters occur, and foundations step in to help communities in need.
The Council looks forward to working with Congressman Paulsen and his staff to advance this bill.
Correction: An earlier version of this statement misidentified the co-sponsors of H.R. 4691. We apologize for the mistake.