In This Week's Edition of Snapshot
- Tax Reform Update: Republican leaders unveil tax reform framework
- Obamacare repeal bill pulled once again
- HUD releases new strategic plan
- In the States: State budgets remain in gridlock, Nonprofit responses differ on city demands for payments in lieu of taxes
In the coming months, we will provide weekly updates with new developments in the tax reform process.
This week marked an important checkpoint in the tax reform process. Republicans released a “Unified Framework for Fixing our Broken Tax Code” following a two-day retreat of the Republican members of the House Ways and Means Committee and just ahead of yesterday’s retreat for the entire House Republican conference. The framework reflected input from leadership in both Congress and the Administration—often referred to as the “Big Six.” Though the framework does not specify how revenue will be generated to offset the “cost” of the desired changes, it does lay out some details about top priorities shared between the White House and congressional Republicans.
The framework lays our four principles: 1) “make the tax code simple, fair and easy to understand,” 2) “give American workers a pay raise by allowing them to keep more of their hard-earned paychecks,” 3) “make America the jobs magnet of the world by leveling the playing field for American businesses and workers,” and 4) “bring back trillions of dollars that are currently kept offshore to reinvest in the American economy.”
Other important highlights from the framework include stated proposals to:
- Roughly double the standard deduction to $24,000 for married taxpayers filing jointly, and $12,000 for single filers;
- Consolidate the current seven tax brackets into three at rates of 12%, 25%, and 35%;
- Increase the income levels at which the child tax credit begins to phase-out;
- Eliminate many itemized deductions under current law, while preserving tax incentives for charitable giving and home mortgage interest; and
- Repeal the estate tax.
Council President and CEO Vikki Spruill issued a statement on the release of this document. President Donald Trump held a press conference yesterday afternoon from Indianapolis, IN, “to announce [the Republican] framework to deliver historic tax relief for the American people.” Republican congressional leaders also held a joint press conference yesterday where they emphasized the idea of pro-growth tax reform. Key tax-writers in the House and Senate also issued statements about the framework, including the Senate Finance Committee’s Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR), as well as the House Ways and Means Chairman Kevin Brady (R-TX) and Ranking Member Richard Neal (D-MA).
Chairman Brady plans to continue promoting this framework with speeches today—one happening this morning at an event with the Heritage Foundation at 9:30 a.m. ET, and one happening later today at an event with the U.S. Chamber of Commerce at 1:30 p.m. ET.
In preparation for the rollout of the tax reform framework, President Trump dined with conservative leaders to help sell them on the plan. According to The Hill, “The dinner featured a cadre of Washington’s conservative leaders, all of whom remain staunch allies of Trump, including Concerned Women for America CEO Penny Nance, Susan B. Anthony List President Marjorie Dannenfelser, Americans for Prosperity President Tim Phillips, Heritage Foundation founder Ed Fuelner, American Conservative Union leader Leonard Leo and a handful of others. The president, sources said, wants his tax reform package to be ‘historic’ and believes that the lowest-possible corporate tax rates will bring back manufacturing jobs, boost gross domestic product growth to 4 or 5 percent and generally make American businesses more competitive.”
On Tuesday, President Trump met with a bipartisan group of 17 House members of the Ways and Means Committee to talk about tax reform, where he stated that “It’s time for both parties to come together.” The group included eight Democrats (Reps. Richard Neal – MA, Lloyd Doggett – TX, Brian Higgins – NY, Ron Kind – WI, John Larson – CT, Linda Sanchez – CA, Terri Sewell – AL, and Mike Thompson – CA) and nine Republicans (Reps. Kevin Brady – TX, Pete Roskam – IL, George Holding – NC, Mike Kelly – PA, Kenny Marchant – TX, Pat Meehan – PA, Kristi Noem – SD, Tom Reed – NY, and Jim Renacci – OH). Following the meeting, House Ways and Mean Ranking Member Richard Neal noted that “[the President] said, quote, the rich will not benefit”—signaling the White House’s intent to work across the aisle on tax reform. Ultimately, though, key House Democrats maintained concerns with the Republican framework, which they discussed at a forum held shortly following Wednesday’s release of the plan.
The repeal of Obamacare, which has long been a goal of Republicans in Congress, suffered another blow this week. After the failure to repeal President Obama’s signature health care law before the August recess, many thought the issue was dead for the year. However, last week the repeal effort was revived by Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) after a ruling from the Senate parliamentarian forced Republicans to pass a bill by the end of the fiscal year (Sept. 30) if they wanted to do so without needing Democratic help.
The bill received a hearing in a heavily protested meeting of the Senate Finance Committee on Monday, and was tentatively scheduled for a vote on Wednesday. However, Majority Leader Mitch McConnell (R-KY) was unable to find enough votes in his caucus, with conservatives and moderates both finding issues with the bill, to pass the legislation. McConnell chose to pull the bill before consideration rather than facing a similar fate to the summer failure of losing a close vote on the Senate floor.
Last week the U.S. Department of Housing and Urban Development (HUD) released a new strategic plan. According to HUD’s website, “We're rethinking HUD from the bottom up by engaging our career professionals, those who know what works well and what changes we can make to be more responsive to the American people. One of the main goals of HUD's vision is to reimagine how HUD itself works, how we deliver our services and how we might do that more efficiently and effectively. It also means that as stewards of the public trust, we must all take ownership of what we do—to be accountable as the public's servants.”
The three main goals of the plan are: Reimaging the Way HUD Works; Restoring the American Dream; and Rethinking American Communities.
Exclusive from our colleagues at the National Council of Nonprofits.
State Budgets Remain in Gridlock
Months into the new fiscal year for most states, four states (Alaska, Connecticut, Illinois, and Pennsylvania) have multi-billion dollar deficits and 11 started their fiscal years without final budgets. Yesterday, Wednesday, September 27, became a big day for gridlock in both Connecticut and Oklahoma as the legislatures and governors ended in stalemates. Connecticut is three months into the new fiscal year without a budget and some dramatic last-minute position switching led to the Legislature passing a minority-sponsored budget a week and a half ago. The Governor met with Republican leaders and plans to veto the budget. Meanwhile, Oklahoma suspended House floor proceedings in its Special Session yesterday, saying the House will not return until a budget agreement is reached. The Governor had called the special session to address a $215 million budget shortfall this year. Legislators disagree over a cigarette tax increase and an oil and gas production tax increase.
Nonprofit Responses Differ on City Demands for Payments in Lieu of Taxes
Nonprofits are responding in different ways to demands cities for payments in lieu of taxes to close budget gaps. As reported previously, many of the nonprofits that Boston targeted to make “voluntary” payments in lieu of taxes (PILOTs) continue to refuse to yield to the city’s pressure. The City has acknowledged recently that only 13 of the targeted organizations (of 49 assessed) paid the full amount of the imitation tax bill. Educational institutions were least likely to participate, and among the 10 cultural institutions on the list, three paid between 6 and 40 percent of what the city wanted, and four, including the Museum of Fine Arts and the New England Aquarium, paid zero.
In St. Paul, a process that started off asking how to structure a PILOT program turned into a discussion of whether and on what terms nonprofits should consider contributing to the City’s treasury. The Minnesota Council of Nonprofits participated on a special committee of the Citizens League considering nonprofit engagement with the city. The group gathered data to inform their discussions and the general public. The final report, “Saint Paul PILOT/SILOT Project,” recommends that “the City of Saint Paul and its tax-exempt organizations do what has always worked best in Saint Paul: sitting down together to negotiate a uniquely-Saint Paul partnership and strategy that provides for the future health and vitality of all of the organizations and individuals in Saint Paul” because their “fates remain intertwined and their successes remain dependent on each other.” The report also “identifies the key questions that should be considered, and provides a guide for developing solutions and working together.”