In this Week’s Edition of Snapshot…
- Tax Reform Update: What’s next for tax reform now following the ACA mishap?
- Congress aims to avoid government shutdown
- Administration weighs in as Congress gears up for a spending bill
- In the States: Property Tax Fights Continue in the Courts and Legislatures
In the coming months, we will provide weekly updates with new developments in the tax reform process.
In a major turn of events last week, House Republicans ended up pulling the American Health Care Act of 2017 (H.R. 1628)—which would have repealed the Affordable Care Act (often referred to as the “ACA” or “Obamacare”)—from consideration on the House floor.
This outcome complicates plans to tackle comprehensive tax reform this spring, an action that was intended to follow the successful “repeal and replace” deal for the ACA. Members of the GOP in the House were counting on establishing a baseline with the healthcare legislation that would help finance the sweeping tax cuts they plan to enact as a part of tax reform.
“This does make tax reform more difficult, but it does not in any way make it impossible,” House Speaker Paul Ryan (R-WI) said in a press conference last Friday. “We will proceed with tax reform.”
The question becomes, how will House Republicans proceed? Well, there are a handful of options that have been raised by both Congressional leaders and the Administration. Speaker Ryan has stated his intent to continue working toward developing a version of healthcare legislation that would have enough support to pass the House. A BloombergPolitics article reports that House Republicans are considering attempting another vote on healthcare legislation as early as next week.
Other reports have indicated that the Trump Administration is considering pushing legislation that jointly addresses tax reform and infrastructure in order to garner support from among Democrats—an idea that has captured the support of Senator John Thune (R-SD), sharing with reporters that he thinks “it’s easier because [he] thinks you have equities in both the Republicans and Democrats when you start talking infrastructure and tax reform, and there could be bipartisan interest in getting something.”
From the Senate Finance Committee, Chairman Orrin Hatch (R-UT) told Bloomberg BNA that he is “for the art of the doable,” and that—although it is his goal to do a complete overhaul of the tax code—he would not necessarily be opposed to a tax package that ends up being temporary and not revenue neutral.
With regard to the substance of the forthcoming tax plan, House Ways and Means Chairman Kevin Brady (R-TX) continues to emphasize the desire to “be very bold” in their approach—likely in effort to build support for the controversial border adjustment tax proposal that is a central component of the plan the House is discussing.
As April approaches, an important deadline looms before Congress. On April 28, funding for the government will cease unless legislators pass a bill to extend funding for the rest of fiscal year 2017—which ends on Sept. 30. Congress’ challenge may be more difficult than usual given the very partisan nature of the recent healthcare fight.
According to Roll Call, “Lawmakers are attempting to piece together as many of the remaining 11 spending bills as possible in a broader package known as an omnibus. The goal is to avoid passing a continuing resolution, or CR, which would continue funding at the previous year’s levels. ‘There’s no desire for a CR,’ Senate Majority Leader Mitch McConnell [R-KY] told reporters.”
The potential silver-lining for Congress is that this must-pass legislation will have to be bipartisan as it will need at least eight Democratic votes in the Senate (the funding bill would be subject to a filibuster, so 60 votes would be required to begin and end debate).
Consequently, it is unlikely House and Senate Republicans will attach any policy riders, such as funding for President Trump’s proposed border wall or the de-funding of Planned Parenthood—which would cause Democrats to vote against the measure.
The Trump administration is proposing to cut $18 billion in discretionary funding for the current fiscal year (FY 2017) as Congress gears up to tackle writing the spending legislation.
According to Politico, “In an extensive document shared with House and Senate appropriations committees on Friday, and obtained by POLITICO, the Trump administration is offering its most detailed instructions to date on how Congress should shape the trillion-dollar spending legislation Congress must enact by April 28 to prevent a government shutdown.”
However, Republican Congressional leaders are signaling that they have already begun the process of writing the spending bills and it is likely too late to include President Trump’s desired cuts. Additionally, as the cuts to discretionary spending will almost certainly be opposed by a unified Democratic caucus, it gives House and Senate leadership a greater incentive to oppose the cuts. Without Democratic votes on a government spending bill, the country will be on the path toward a government shutdown.
Exclusive from our colleagues at the National Council of Nonprofits.
Challenges to property tax exemptions continue rage on in the states with court rulings and multiple legislative attacks.
Massachusetts nonprofits celebrated a unanimous Supreme Judicial Court decision this month that overruled the tax board in regards to the National Shrine of Our Lady La Salette’s welcome center and maintenance building. Determining whether the property in question met the Shrine’s “dominant purpose” of religious worship, the Court stated, “even a church cannot live on prayer alone.” Conversely, the Nebraska Tax Equalization and Review Commission upheld a county assessment denying tax exemption for six parcels of land owned by the Crane Trust. The nature conservancy and environmental group is expected to appeal the decision as it also challenges adverse assessments on 31 other parcels related to bird migration and education.
While one Massachusetts charitable nonprofit won in court, a state legislator reintroduced a bill linking property tax exemption to executive salaries. The bill would apply to public charities whose five highest paid employees collectively receive salaries of more than $2.5 million annually, targeting hospitals and universities. Earlier this year, the Montana legislature rejected a similar measure that sought to remove the property tax exemption for any nonprofit that pays compensation greater than $250,000.
Elsewhere in New England, legislation in Maine seeks to remove property tax exemptions from land held for conservation or public access purposes. Another Maine bill would alter the exemption for property incidentally used to provide goods, services, or materials in exchange for any amount, type, or form of remuneration. The New Hampshire Legislature found a bill proposing to restrict the property tax exemption for nonprofit hospitals to apply only to the main hospital campus as Inexpedient to Legislate, effectively killing it for the session.
Finally, in an interesting reversal of trends, a bill in North Dakota would declare any property owned by a religious corporation or organization and used for its charitable purpose to be exempt from property taxation. Notably, the legislation declares that earnings derived from the provision of goods or services on the property may not be viewed as profits that could otherwise disqualify the property for the exemption.