In This Week's Edition of Snapshot…
- Tax Reform Update: Health care legislation passed the House — so what now for tax reform?
- Private foundation excise tax simplification bill introduced in House
- House Set to Hold Hearings on Tax Reform and IRS Reform
- FBI Director, Census Director Are Out
- Oklahoma Advocacy Averts a Cap on Charitable Deductions
Last week, the House inched closer to tackling tax reform after passing a bill to largely repeal and replace the Affordable Care Act (ACA). The bill now sits with the Senate — though it seems unlikely it will pass the upper chamber in its current form given the lack of support among Senate Finance Republicans.
With this matter behind them, the House now turns its full attention to tax reform. Yesterday, Speaker of the House Paul Ryan (R-WI) headed to Ohio to make the case to business leaders for a core component of the House tax plan — the border adjustment tax (BAT).
Much of the Senate Finance Committee is still skeptical of the House plan — notably, the BAT — as indicated by Committee Chairman Orrin Hatch (R-UT) on Tuesday. The Chairman’s comments came shortly after Senate tax writing committee members met with White House Chief Economic Advisor Gary Cohn and Treasury Secretary Steven Mnuchin, where it was communicated that the administration remains opposed to the BAT.
The key takeaway from all of this is that although the House has overcome one major obstacle to achieving tax reform (addressing health care legislation), the journey to passing comprehensive tax reform legislation is far from over. The White House has reiterated its intent for tax reform to be a bipartisan process, but even if that turns out to be true, Republicans still face a great deal of pushback from within their own party — with members of the far-right Freedom Caucus already crafting a tax reform plan that they hope to integrate with the existing tax blueprint plan.
Late last week, Congressman Erik Paulsen (R-MN), with Congressmen Danny Davis (D-IL), Pat Tiberi (R-OH), George Holding (R-NC), and Richard Nolan (D-MN), introduced a bill (H.R. 2386) in the House to simplify the private foundation excise tax to a flat rate of one percent.
Leading into tax reform, this bill is an important signal of priorities to tax writers on the Ways and Means Committee as they draft comprehensive tax legislation. The number and bipartisanship of cosponsors also signals support for the provision.
The Council is actively engaging with Members of Congress to bolster support on this issue, but it’s critical that Members hear from you — their constituents. It takes less than five minutes to reach out and urge your Representatives to demonstrate their support for strengthening philanthropy by cosponsoring H.R. 2386.
On May 18, the House Ways and Means Committee will hold a hearing on tax reform to highlight how it “will grow our economy and create jobs across America.” The hearing is expected to focus on policies that will “generate economic growth, create jobs, and increase paychecks for all Americans.”
Additionally, on May 19, the House Ways and Means Subcommittee on Oversight will hold a hearing to discuss overhauling the Internal Revenue Service (IRS).
According to POLITICO Pro, “'House Republicans are putting together a plan to write a bill to restructure the IRS separate from comprehensive tax reform legislation,' Rep. Peter Roskam (R-IL) recently said. Ways and Means Chairman Kevin Brady (R-TX) has said he wants to entirely rebuild the IRS to better fit customer needs — the customer being the taxpayer. Various IRS reform ideas have been discussed, including numerous suggestions for a better focus on taxpayers by improving the way they’re served.”
The hearing will be a good gauge of what House Republicans believe should be the core functions of the IRS going forward, particularly in the context of a comprehensive tax overhaul that has often been touted as being much simpler than the current tax code.
In what was seen as a bombshell to the country, Congress, and even senior officials at the FBI, President Donald Trump fired FBI Director James Comey on Tuesday.
According to The Wall Street Journal, “The reason for the firing, according to White House and Justice Department officials, was Mr. Comey’s much-criticized handling of an investigation into Hillary Clinton’s use of a private email server while Secretary of State. The White House said Mr. Trump relied on the recommendations of Attorney General Jeff Sessions and Deputy Attorney General Rod Rosenstein.”
The FBI is currently in the midst of a probe into then-candidate Trump’s campaign and potential ties to Russia. Since the firing, Members of Congress on both sides of the aisle have questioned the timing of the firing and called for a special prosecutor to investigate the potential Russian ties to Trump’s campaign. Click here for a link to all of the Congressional statements on the Comey firing.
In further agency news, the Director of the U.S. Census Bureau has resigned. This comes at an important moment for the Bureau as they are set to begin ramping up activity for the 2020 census. According to The Washington Post, “John H. Thompson, who has served as Director since 2013 and worked for the Bureau for 27 years before that, will leave June 30, the Commerce Department announced Tuesday. The news, which surprised census experts, follows an April congressional budget allocation for the census that critics say is woefully inadequate."
Experts worry that having the Census Bureau leaderless while it faces major concerns over adequate funding could have devastating effects on preparations for the decennial count.
Exclusive from our colleagues at the National Council of Nonprofits.
Exclusive from our colleagues at the National Council of Nonprofits.
Oklahoma Advocacy Averts a Cap on Charitable Deductions
In the face of unprecedented advocacy efforts from charitable nonprofits, including religious organizations, the Speaker of the Oklahoma House pulled a bill from floor consideration that would have imposed a $17,000 cap on itemized deductions, including charitable deductions, for purposes of state income taxes. The measure had been added in a committee on Monday in an effort to raise $166 million in additional revenue to help close the state’s large budget deficit.
Marnie Taylor, President of the Oklahoma Center for Nonprofits, the organization leading the advocacy efforts, expressed the key points delivered to legislators: “We feel very strongly that we should not continue to balance our budget on charity — either by shifting the burden to nonprofits or taking away the very incentives that encourage people to donate to charity. The optics of this are terrible for Oklahoma. This happened in Hawaii a few years ago, and they ended up reinstating the charitable deduction just two years later because it was such a disaster. I know that our Legislature can find better ways to increase revenue to support core services without damaging the charitable sector that fills the ever-increasing gaps in service.“
Nonprofits got the support from former U.S. Senator Tom Coburn, who released a statement saying, “Oklahoma policymakers shouldn't exacerbate Oklahoma's problems by enacting a tax increase that penalizes the productive behavior of Oklahomans who tithe, have a mortgage, charitably give, pay significant sums of property taxes to support their local schools, and pay for significant family medical expenses.”
A new version of the legislation is expected to be reintroduced today, reportedly with a carve-out to ensure that charitable deductions are not included in any cap on itemized deductions.