In This Week's Edition of Snapshot…
- Ways and Means holds tax reform hearing, tension builds around border adjustment idea
- New research estimates sharp decrease in giving under proposed tax code changes
- Trump administration releases FY 2018 budget
- In the States: New York nonprofit contractors take on City Hall; Texas two-step on nonprofit independence and public disclosures
The House Ways and Means Committee held a hearing on Tuesday to discuss “Increasing U.S. Competitiveness and Preventing American Jobs from Moving Overseas,” where the border adjustability tax (BAT) was the major topic of discussion. This provision, the cornerstone of the House Republican Tax Blueprint, has met with sharp criticism both from within and outside of the party — which was made clear in the hearing yesterday.
Democrats on the Committee were united in their opposition to this measure, asserting that it would harm middle and lower income taxpayers. There was less unity among Republican members of the Committee. While most of them support this provision, Rep. Erik Paulsen (R-MN) stated strong opposition and Reps. Mike Kelly (R-PA) and Jim Renacci (R-OH) expressed skepticism.
The BAT faced further criticism from the Trump administration on Tuesday, with Treasury Secretary Steve Mnuchin stating that “it doesn’t create a level playing field,” and that he “cannot support the border adjustability provisions as introduced.”
There has already been discussion about this intraparty opposition to the BAT being potentially detrimental to passing a tax reform bill, and Tuesday’s events only served to re-energize this sentiment.
Despite the questions swirling around the fate of the competing Republican tax plans, the House Ways and Means Committee continues to ramp up efforts on tax reform — with Chairman Kevin Brady (R-TX) announcing recent expansions to the Committee’s tax staff.
A new report estimates that increasing the standard deduction and decreasing marginal tax rates (as has been proposed in the House Tax Blueprint and the White House’s tax plan) would decrease charitable giving by $13.1 billion.
The research, which was conducted by the Lilly Family School of Philanthropy at Indiana University and was commissioned by Independent Sector, looks at the impact of changes to the tax code on charitable giving across different income levels.
The findings support the notion that enacting a universal charitable deduction in conjunction with the other proposed changes (i.e. making the charitable deduction available to all taxpayers regardless of whether they itemize their taxes) would not only recoup the loss in giving, but would actually increase giving — providing an additional $4.8 billion to be invested in communities across the country.
The Council supports enacting a universal charitable deduction and is working to educate Members of Congress and their staff on the necessity of doing this as a part of tax reform.
On May 23, President Trump released his budget for fiscal year (FY) 2018. According to NPR, “President Trump's proposed budget released Tuesday rests on a key assumption: The economy will grow much faster than it has in recent years — and at a more robust pace than most analysts predict. Trump's proposal for fiscal 2018 will seek to balance the federal budget over the next decade by making deep cuts to safety-net programs such as Medicaid, food assistance and disability benefits, and by trying to goose economic growth through deregulation and tax cuts.”
While the President’s budget often gets much attention, it is primarily a messaging document stating the administration’s priorities — Congress almost always ignores the president’s requests in their budgeting and appropriations process. The White House plan is strongly opposed by Democrats and has also faced some criticism from very conservative members in the Republican party due to proposed funding cuts for programs like Meals on Wheels.
This week, members of the President’s administration have been testifying on Capitol Hill in defense of the budget proposal. Treasury Secretary Steve Mnuchin testified yesterday before the House Ways and Means Committee and will testify today in front of the Senate Finance Committee.
Exclusive from our colleagues at the National Council of Nonprofits.
New York City nonprofits providing services on behalf of local government are fed up with late payments and underpayments, and they aren’t going to take it anymore.
That was the message recently at an open forum sponsored by The Clark Foundation, an organization dedicated largely to helping lift people out of poverty. Speakers identified challenges such as payments for services that only cover 87 percent of costs, which force nonprofits to raise funds from philanthropy or otherwise subsidize the government. Doug Bauer, head of The Clark Foundation, relayed how the City had owed one nonprofit $44 million for more than a year after services had been delivered. Bauer characterizes the financial problems nonprofits with government grants and contracts face as “a quiet crisis that can no longer be quiet.” The problems continue to worsen as cuts in government funding are accompanied by rising costs. But these issues are not unique to New York City — it is a quiet crisis across the country.
Texas Two-Step on Nonprofit Independence and Public Disclosures
There was drama in the Lone Star State last week as Senators sought to turn non-controversial disclosure legislation into an intrusive, burdensome regime targeting nonprofits. A bill that has passed the House would require the state government to expedite responses to requests for public information. The Senate attempted to amend that bill to insert the text of Senate legislation designed to extend public records laws to nonprofits with government grants and contracts. Specifically, the Senate measure would expand the definition of a governmental body for the purposes of public information to include (1) a nonprofit that receives public funds or other public resources for purposes other than a specific and definite obligation to provide a measurable amount of service in exchange for the funds, (2) receives public funds under a contract that indicates a common purpose or creates an agency-type relationship with a public entity, or (3) provides services traditionally provided by a government body. So far, the parliamentarian rejected the addition of the Senate language onto the other bill. As in Oregon and Washington state earlier this year, nonprofits regularly face efforts by public-sector unions, legislators, and interest groups to impose governmental burdens on independent charitable organizations.