In This Week's Edition of Snapshot…
- A Month into the Government Shutdown
- Ways and Means Hearing on the Effects of the Shutdown Cancelled
- Rep. Chris Smith Introduces Universal Deduction Bill
- Rep. Tom Marino Resigns from Congress
- States Reimagining Charitable Giving Incentives
It is the fifth week since the government shutdown started, and there are no signs of it ending. Lawmakers remain in Washington, DC, cancelling the first week of recess due to the shutdown. Over the weekend, President Trump proposed including temporary protection for some undocumented immigrants in exchange for $5.7 billion in funding for his border wall. House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) rejected the proposal.
On Wednesday, the House voted 229-184 on H.J.Res.28, a package of six spending bills that would fund nine shuttered federal departments through Feb. 28. A vote is set for today on a separate stopgap spending bill that would fund the Department of Homeland Security at current levels, also through Feb. 28. All of the now more than ten House-passed measures have been rejected by Senate Majority Leader Mitch McConnell (R-KY) due to a lack of funding for the border wall.
Today the Senate will vote on two separate funding bills, one of them introduced by Majority Leader McConnell (R-KY)—which mirrors President Trump’s immigration proposal and includes $12.7 billion in disaster aid. A second bill proposed by Democrats would fund the government until Feb. 8, and does not include funding for the border wall. Neither of these proposals are likely to pass, given that they need 60 votes in the divided Senate. The vote comes as federal employees are set to miss their second paycheck at the end of the week.
Meanwhile over 800,000 federal employees remain impacted by the shutdown, with 380,000 furloughed and 450,000 working without pay. Thousands of federal workers were called back to work without pay last week, but many employees are not showing up. At the IRS, hundreds of employees across the country are not going back to work due to financial hardship or coordinated protest efforts. These actions could affect the government’s ability to process tax payers refunds on time. Other federal employees from the Department of Agriculture and the Transportation Security Administration have begun calling in sick, and federal law enforcement agencies say the shutdown is increasing stress among agents and affecting investigations.
Yesterday, Chairman Neal cancelled a hearing–scheduled for today–to examine the impact of the shutdown on the Treasury Department and the tax filing season. Last Wednesday, Chairman Richard Neal (D-MA) invited Treasury Secretary Steven Mnuchin to testify before the committee, but the Secretary declined to attend.
This week, Secretary Mnuchin was supposed to attend the World Economic Forum at Davos but President Trump halted the trip of the US delegation due to the government shutdown.
Last Thursday, Reps. Chris Smith (R-NJ) and Henry Cuellar (D-TX) introduced the Charitable Giving Tax Deduction Act, (H.R. 651) —which was previously introduced in the 115th Congress—to enact a clean, uncapped, above-the-line charitable deduction—expanding the opportunity to claim the charitable deduction to the many taxpayers who claim the standard deduction. This bill takes a critical step towards mitigating the negative impacts of tax reform on charitable giving.
This bill is the first of many other Universal Deduction bills that are expected to be introduced in the 116th Congress.
Yesterday, Rep. Tom Marino (R-PA) resigned from Congress to take a job in the private sector. Rep. Marino had just been reelected to serve a fifth term in the House. His departure leaves Republicans with 198 seats, as the results from the race for the North Carolina 9th District remain uncertified. Tom Wolf, the governor of Pennsylvania, will schedule a special election to fill Mr. Marino’s seat.
Exclusive from our colleagues at the National Council of Nonprofits.
The federal Tax Cuts and Jobs Act, enacted at the end of 2017, is barely a year old and is already generating scores of bills at the state level as legislators seek to conform state law to the revised federal tax code or to create variances from the federal law. The proposals to decouple state and federal laws are drawing the most attention from charitable nonprofits and foundations.
Lawmakers in several states have introduced legislation to reduce or limit the expected adverse impact of the federal tax law on charitable giving, resulting from the near doubling of the federal standard deduction to $12,000 for individuals and $24,000 for couples. Nationwide, the Tax Cuts and Jobs Act is predicted to cause 28.5 million fewer taxpayers to claim itemized deductions. Bills in Kansas, New York, and Virginia would permit taxpayers to claim itemized deductions on their state returns, even when they elected the standard deduction on federal returns.
A separate Virginia bill would provide a nonrefundable tax credit (capped at $250 individual/$500 couple) to those who do not itemize deductions on their federal tax returns. Going further, legislation in Arizona would establish a non-itemizer charitable deduction, retroactive to 2018. If enacted, these states would join Colorado and Minnesota in providing charitable tax incentives for all taxpayers, regardless of whether they take the standard deduction or itemize.
Viewing tax policies more narrowly, bills in other states would create new giving incentives for various charitable organizations. Mississippi legislation would establish a tax credit for private school and home-schooling expenses for the taxpayer’s dependent children. In Iowa, legislators have proposed a state tax credit for charitable contributions to regenerative medicine research and an exemption from taxation of wages received by an individual from a nonprofit for services provided to individuals with disabilities.