In This Week's Edition of Snapshot
- Tax Reform Update: Congress Ramps Up Tax Reform Efforts
- Treasury Names New Deputy Assistant Secretary for International Tax Affairs
- In the States: Nonprofits Balk at Making “Voluntary” PILOT Payments to Boston
In the coming months, we will provide weekly updates with new developments in the tax reform process.
Rep. Diane Black (R-TN), Chairman of House Budget Committee, is urging Speaker Paul Ryan (R-WI) to allow the fiscal year (FY) 2018 budget resolution, which passed the Budget Committee before the August recess, to be put on the House floor for a vote. The budget resolution is an important step for the House to begin formally moving tax reform, as it contains reconciliation instructions—that would allow the Senate to pass tax reform without Democratic support. However, due to some skepticism from more conservative members of the caucus, House Republicans appear short on votes to pass the resolution. According to POLITICO’s Morning Tax: “There’s still a staredown between those like Black, who want to pass a budget so that Republicans can move on to tax reform, and those like Rep. Mark Meadows (R-NC), who first want to know more details about where GOP leaders are heading on tax reform.”.
It remains to be seen when the House will consider the FY 2018 budget resolution, with a recent report noting that it may not happen in September. It would not be a huge surprise if this is the case as Congress has a couple of must-pass items on its agenda before the end of the month. Both the Federal Aviation Administration and the Children’s Health Insurance Program must be reauthorized. Continued delays in passing a budget resolution will complicate Congressional Republican leaders’ plans for passing tax reform in 2017 without Democratic support.
On Wednesday, House Ways and Means Committee Chairman Kevin Brady (R-TX) indicated that more details of the House’s tax overhaul would be made available the week of Sept. 25. Brady, speaking to the House Republican conference, outlined plans to complete a budget with reconciliation instructions for tax reform by mid-October followed by a Ways and Means Committee markup of the tax bill. According to POLITICO, “Brady laid out the plan to House Republicans to assuage concerns from rank-and-file lawmakers over a lack of visible progress on an issue that GOP leaders see as their best hope for a major legislative accomplishment before the 2018 midterm elections. He told members ‘the stakes are higher than ever that we deliver,’ a source present in the room said.”
President Donald Trump has also been pushing forward on tax reform, and on Tuesday reached across the aisle to discuss his views on the effort. Trump hosted three Democratic senators (Joe Manchin, D-WV; Heidi Heitkamp, D-ND; and Joe Donnelly, D-IN) along with members of his party for dinner. According to The New York Times, “The White House says President Donald Trump’s dinner with Republican and Democratic senators to talk taxes was ‘highly productive’ and will ‘spur constructive discussions.’” At first glance, this appears to be a somewhat surprising step, given that the Republican-led Congress has been focusing on passing a tax code overhaul on a partisan basis. However, Sens. Manchin, Heitkamp, and Donnelly are all up for reelection in 2018 and all hail from states that President Trump won in the election. Additionally, they “are the only Democratic senators who did not sign a letter addressed to Republican leaders and Trump” that stated Democrats would not support tax cuts for the top one percent in tax reform.
Earlier today, the Council’s government relations team attended a hearing held by the Senate Finance Committee to discuss potential approaches to reforming the individual side of the tax code. Witnesses included Professor of Law and Public Policy at New York University School of Law Lily Batchelder, Research Fellow for American Enterprise Institute Alex Brill, Senior Vice President of Pioneer Realty Iona Henderson, and Visiting Fellow for American Enterprise Institute Ramesh Ponnuru. The hearing focused on how to deliver tax relief to the middle class, with specific ideas such as an expansion of the child tax credit, the possible elimination the state and local tax, and mortgage interest deductions were discussed. The charitable deduction was not mentioned. This committee will hold another hearing next Tuesday, Sept. 19 to discuss business tax reform.
Also today, Sens. Debbie Stabenow (D-MI) and Susan Collins (R-ME) are expected to reintroduce the Public Good IRA Rollover Act. This bill would:
- Eliminate the $100,000 per year cap on qualified charitable distributions from an IRA;
- Allow for qualified distributions to certain pension plans from an IRA;
- Expand the IRA charitable rollover to allow for qualified charitable distributions to donor advised funds (DAFs), private non-operating foundations, and supporting organizations; and
- Allow for qualified distributions to certain split-interest entities (including, charitable remainder trusts, pooled income funds, and charitable gift annuities).
This bill was previously introduced in 2015 by Sens. Chuck Schumer (D-NY) and Susan Collins (R-ME). The Council supports expanding the IRA rollover to allow for distributions to DAFs and private foundations, and will continue to push to have these provisions included in any tax legislation that is put forward.
Last week, the U.S. Treasury Department named Lafayette G. “Chip” Harter III as the new Deputy Assistant Secretary for international tax affairs. Harter was a principal at PricewaterhouseCoopers focusing on international tax before beginning at Treasury on Sept. 5. According to BGov, “Harter joins Treasury at a time when cross-border issues could be a critical element in the potential tax reform that lies ahead.”
Exclusive from our colleagues at the National Council of Nonprofits.
Nonprofits Balk at Making “Voluntary” PILOT Payments to Boston
A majority of 49 targeted nonprofits in Boston continue to stand up to City Hall by refusing to pay some or all of what the government sought in the form of “voluntary” payments in lieu of taxes (PILOTs), the City acknowledges in a new report released late last month. Started in 2011, the Boston PILOT scheme calls for larger educational, medical, and cultural nonprofits that are exempt from property taxes under the Commonwealth Constitution to contribute to the City’s coffers based on a formula calculated at 25 percent of the assess property value minus what the city determines to be the value of the organization’s “community benefits.” Boston sent assessments amounting to nearly $50 million to the 49 targeted institutions and received $32.4 million in FY 2017, 65.5 percent of the desired total.
Data from the City indicate that only 13 organizations paid the full the amount requested from the government. Educational institutions were the least likely to yield to pressure from the City, with nine schools and colleges providing no payment and nine, including Harvard and Boston College, paying less than the full amount assessed. Medical institutions tended to pay more of the mock tax bill, with 13 of the 16 targeted medical institutions paying about 92 percent of what the City requested. Among the 10 cultural institutions on the list, three paid between 6 and 40 percent of what the City expected of them, and four, including the Museum of Fine Arts and the New England Aquarium, paid zero.
The annual release of the PILOT program results is an occasion of public shaming by government officials, which has generated pushback from the Boston Herald. In an editorial, “Hub hits up nonprofits,” the editorial board wrote, “we have no issue with those institutions that agree to this arrangement and pay every dime of what the city seeks. That’s between them and their donors and trustees.” It expressed the views of many nonprofits when it wrote, “It’s the implication that those institutions that don’t cut a check in the full amount have shirked their responsibility that is galling.”
Keep in Touch!
Please feel free to reach out to any of us on the Public Policy Team with any comments or concerns, or to share an issue, article, event, or op-ed you’d like to see covered in a future Washington Snapshot.