In this Week’s Edition of Snapshot…
- Tax Reform Update: President Trump addresses Congress, Secretary Mnuchin speaks on tax reform, Chairman Brady vows to repeal the Johnson Amendment, and the Council and colleagues speak out in defense of nonpartisanship
- Legislation to invest in “opportunity zones” introduced in House and Senate
- Ben Carson is confirmed as Housing and Urban Development Secretary
- President Trump orders agencies to focus on regulatory reform
- White House budget aims to increase defense spending, cut domestic programs
- In the States: States reconsider property tax exemptions; Immigration focus leads to employment status legislation in the states
In the coming months, we will provide weekly updates with new developments in the tax reform process.
On Tuesday evening, President Trump delivered his first address to a joint session of Congress. Though his remarks did not provide any definitive confirmation on the Administration’s position on the controversial border adjustability provision (which has the potential to throw a major wrench in the progression of comprehensive tax reform), the President promised “massive tax relief” for the middle class and decreased rates for corporations.
We have also begun to hear some insight into this issue from recently confirmed Treasury Secretary Steven Mnuchin. In an interview with CNBC last week, Mnuchin notes that the Administration is looking “closely at the issue of the border adjustability tax” and that there are “some very interesting aspects of it.” We expect more clarity around this when the Administration releases its plan for tax reform — which is anticipated to be delivered within the next couple of weeks.
On a similar note, Chairman of the House Ways and Means Committee Kevin Brady addressed the Conservative Political Action Conference (CPAC) last Friday. In his remarks, he stated that “After we make the tax code so fair and simple… we will bust up the IRS. We bust it up. A simpler, fairer tax code demands a simpler, fairer tax collector.”
Chairman Brady also echoed the recent sentiment of President Trump around the Johnson Amendment, stating that “in our Republican tax reform, we’re going to repeal the damaging effects of the Johnson Amendment once and for all.” This proposed repeal is deeply concerning to many in the charitable sector. Last month, the Council prepared a background paper and sent a letter to every Member of Congress voicing our concern over the potential negative implications of this change.
Just this week, in partnership with our colleagues at the National Council of Nonprofits, BoardSource, and the National Human Services Assembly, we have drafted a sign-on letter to Congress restating our opposition to repealing the prohibition on political intervention by charities. We urge our readers to consider signing your organizations on to this letter. Presenting a united front is vital in the fight to preserve the public trust and confidence that our sector has earned over the years. If you have questions about this or any other tax reform issue, please don’t hesitate to contact the government relations team at firstname.lastname@example.org.
This week, Congressmen Pat Tiberi (R-OH) and Ron Kind (D-WI) and Senators Tim Scott (R-SC) and Cory Booker (D-NJ) introduced the Investing in Opportunity Act in the House (H.R. 828) and Senate (S. 293), respectively.
This bill aims to help revitalize economically distressed communities by allowing investors to temporarily defer capital gains recognition — when an investment or asset is sold for an amount greater than what was originally paid — if they reinvest the money into an “opportunity zone.” Opportunity zones are defined by a combination of census data and governors’ designations.
The intent of the bill is to encourage investors to infuse capital into communities that desperately need it and ensure local needs are truly met by allowing local control over opportunity zone designation. Both H.R. 828 and S. 293 are currently in committee awaiting further action.
Just this morning, Dr. Ben Carson was confirmed as Secretary of Housing and Urban Development (HUD) by a Senate vote of 58-41.
The Council works with closely with HUD on a number of initiatives — notably, the Secretary’s Award for Public-Philanthropic Partnerships (which has an application deadline of tomorrow at 11:59 p.m.).
Last week, President Trump issued a new executive order (EO) aimed at reducing what he sees as burdensome regulations. The EO charges federal agencies to form task forces that will reduce regulations.
According to Politico, “[The EO] directs each federal agency to set up a ‘regulatory reform task force’ to review an agency's existing regulations and search for rules to repeal or modify. The task forces in particular will be directed to ‘focus on eliminating costly and unnecessary regulations,’ according to a White House official.”
This new EO comes after the president, on his first day in office, issued an EO freezing all current regulations from moving forward in the review process. He then issued a separate EO, 10 days later, that requires all federal agencies to repeal two regulations for every new one that is introduced.
While President Donald Trump will formally send his budget outline to Congress sometime this month, a preview of what it will include was shared by the White House on Feb. 27. The big headline was an increase in defense spending by $54 billion while cutting domestic programs by the same amount. Traditionally, the president’s budget is a guideline, as it is up to Congress to craft the actual budget and spending bills; however, the president’s budget gives Congress and the country great insight into the Administration’s priorities for the coming fiscal year.
According to an NPR article, “An official with the White House Office of Management and Budget, who spoke to reporters only if not named, said most agencies will see budget cuts, including foreign aid, which comprises less than one percent of federal spending.” Once the more detailed plan is sent to Congress, legislators will be able to assess potential impacts on the various agencies as well as the deficit Trump’s proposal would have if enacted.
Exclusive from our colleagues at the National Council of Nonprofits.
Connecticut has become ground zero for immediate action on proposals to change the rules on tax exemption on the property owned and used by charitable nonprofits. One bill would retroactively (back to October 2016) repeal the exemption for property owned by hospitals in the state. The legislation would also allow municipalities to levy a property tax on nonprofit hospitals. A separate measure, scheduled for consideration on Friday, would empower local governments to decide whether to tax property after it changes ownership or use.
Elsewhere, the news is more favorable for foundations and nonprofits. The Montana House rejected a bill that sought to remove the property tax exemption for any 501(c)(3) organization that pays compensation greater than $250,000 per year. In New Jersey, a second committee approved an important bill that would prohibit property taxpayers from filing property tax appeals challenging the assessment or exempt status with respect to the property of others. The bill also protects against third party challenges to payment in lieu of taxes (PILOT) and similar agreements between nonprofit property owners and municipalities. Last year, Princeton University settled a case filed by local landowners who had challenged the tax-exempt status of the nonprofit.
Immigration Focus Leads to Employment Status Legislation in the States
Several states are considering mandating that some or all private employers utilize the federal website E-Verify to check the eligibility of potential employees to work in the United States. One measure in Rhode Island and a series of bills in Texas (HB 1453/SB 85, SB 23, SB 254) would require state contractors to utilize the E-Verify system. The Iowa legislature is considering a broad bill that imposes state penalties on employers that hire undocumented aliens; an E-Verify mandate would be imposed on all businesses that receive “economic development incentives” from any state agency. Florida and North Carolina have bills to mandate usage of E-Verify by most employers in their states.