In This Week's Edition of Snapshot…
- Tax Reform Update: Congress and the administration have yet to reach consensus on an approach to tax reform
- Government funding is set to expire at the end of this month
- Private foundations and the charitable deduction—yes, you may lobby!
- In the States: Congressional action, inaction affecting state policy agendas
In the coming months, we will provide weekly updates with new developments in the tax reform process.
Tax reform is still top of mind on Capitol Hill, but the GOP has yet to reach consensus on an approach that can garner enough support to pass. Yesterday, Speaker Paul Ryan (R-WI) remarked, “The House has a plan, but the Senate doesn’t quite have one yet — and they’re working on one. The White House hasn’t nailed it down, so even the three entities aren’t on the same page yet on tax reform.”
The Speaker’s comments echo recent sentiments from Senate Finance Committee Chairman Orrin Hatch (R-UT) that tax reform is going to take longer to accomplish than the goal of finishing it by the August congressional recess. “That's a very tough thing to do,” Hatch told Politico reporters in reference to tax reform. “It took three years the last time they did it.” Despite his comments, though, Chairman Hatch has consistently indicated that he is “dedicated” to getting it done — even if it means conceding a comprehensive reform for a more piecemeal approach.
The administration also continues to work toward developing its own plan for tackling tax reform. Late last week, President Trump met with Gary Cohn, the Director of the National Economic Council; Treasury Secretary Steven Mnuchin; his Chief Strategist Steve Bannon; son-in-law and Senior Advisor Jared Kushner; Shahira Knight from the National Economic Council; and Craig Phillips and Justin Muzinich, both from Treasury, to discuss options for the White House’s forthcoming tax reform outline. The President has also tasked Treasury Secretary Steven Mnuchin with leading outreach efforts to bring both moderate Republicans and Democrats into the fold on their tax reform discussions. This effort has materialized in the form of a group called the Problem Solvers Caucus — a group of 20 Republicans and 20 Democrats who try to find common ground and vote together on issues, such as taxes and infrastructure.
Coordinating these already difficult efforts across Congress and the White House became even more complicated after the Congressional Budget Office (CBO) released a new report that sends a signal of caution against a tax overhaul that is not revenue neutral. These new numbers have raised questions about whether the GOP will be able to deliver on the many promised tax breaks that have been raised in recent months.
Nonetheless, it has yet to be seen how tax reform will take shape. Despite calls from Ways and Means Chairman Kevin Brady (R-TX) for the White House to develop its outline from the existing tax blueprint, White House Press Secretary Sean Spicer insists that they are “driving the train on this.” Until the administration’s plan is released, questions will remain about how aligned the White House is with Congress — setting the stage for how smooth the road ahead will be.
With the whirlwind of recent activity on Capitol Hill, a major upcoming legislative deadline still looms: A fiscal year (FY) 2017 spending bill must be passed by April 28 in order to avoid a government shutdown.
This week, Senate Majority Leader Mitch McConnell (R-KY) told reporters that “discussions are underway on a bipartisan basis — House and Senate appropriators. And we anticipate being able to finish [it] that last week before the time runs out.”
With the confirmation process of Judge Neil Gorsuch to the Supreme Court occupying most of the Senate’s time this week and a Congressional recess scheduled for the following two weeks, that leaves just one legislative week at the end of April to produce and pass a spending bill.
It remains unclear in which chamber of Congress this bill will originate. If the Senate steps in to drive the deal, it is unlikely that there will be a need for a short-term continuing resolution (CR) to give Congress more time for a long-term spending deal. If the House takes the lead, it is less certain, as some House Republicans have raised the possibility of a weeklong CR to buy some additional time for a deal beyond the April 28 deadline.
The answer is: Yes.
While private foundations are generally prohibited from engaging in direct lobbying to influence legislation, there is an exception for legislation that would affect the "existence of the private foundation, its powers and duties, its tax-exempt status, or the deductibility of contributions to such foundation."
As part of comprehensive tax reform, it is expected that legislative proposals will address the charitable deduction, as well as other tax provisions that are important to tax-exempt organizations.
It is important to note that the self-defense exception is not available for activities that would constitute grassroots lobbying — such as encouraging grantees or others to contact their legislators.
The Council respects its members' own determinations regarding legal issues, and individual policies or practices related to lobbying activity. We encourage members to consult with their own legal counsel regarding any questions.
To read our statement on the subject in full, visit our website.
Access to the Council's legal team is a valuable member benefit. Council attorneys are available to discuss your legal questions and to provide legal information by telephone, email, and through our various publications and newsletters. This information is intended for educational purposes and does not create an attorney-client relationship. The information is not a substitute for expert legal, tax, or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.
Exclusive from our colleagues at the National Council of Nonprofits.
Proposed federal spending cuts to domestic programs and the failure of Obamacare repeal efforts in the U.S. House last month are leading governors to adjust their administrative and legislative goals while increasing their federal advocacy efforts.
A central principle of the failed American Health Care Act had been to end enrollment in expanded state Medicaid plans. Now that the repeal efforts are on hold or dead, some states such as Georgia and Virginia are once again looking to expand Medicaid to increase health insurance coverage and tap into federal funding that goes with adoption of Medicaid expansion. The Governor of Illinois is looking to include more programs under Medicaid to save state money, and Arkansas Governor Hutchinson is considering adding new restrictions to its hybrid Medicaid expansion. The Kansas legislature approved legislation to expand the program, but the Governor vetoed the bill last week and the state House fell three votes short of overriding the veto this week.
Governors are also looking at proposed federal spending cuts and speaking up in defense of vital programs that affect the wellbeing of their states. In mid-March, the bipartisan National Governors Association issued a detailed summary of the proposed cuts in President Trump’s initial budget request to Congress, alerting governors to the potential challenges they will face if defense spending is increased by $54 billion with reductions of an equal amount from domestic programs that are typically funded through the states. In recent days, several Republican governors have reached out to administration officials to register their support for existing funding streams. For example, Alabama Governor Bentley expressed his intent to push back against cuts to the Appalachian and Mississippi Delta economic agencies.