In This Week's Edition of Snapshot...
Don't Miss Leading Together: Don't forget to register for Leading Together 2021, including the pre-conference session, Pushing the Policy Envelope: Foundations Acting in a Pivotal Time. This session was designed with foundation policy staff in mind. Join us to hear from thought leaders, foundation executives, and advocates who are working at the forefront of social change and challenging existing policies that maintain the status quo.
The White House is expected to release its full $6T budget request for Fiscal Year 2022 later today. The budget request is expected to include the president's stated policy priorities, including those already reflected in the so-called skinny budget, American Families Plan, and American Jobs Plan. In addition, the Treasury Department will release the Green Book, which will provide more details on the Administration's tax-related proposals, such as changes to the capital gains tax.
As a reminder, the budget request is seen as an expression of the current administration's priorities. Congress still must pass legislation providing funding for the federal government prior to the start of the next fiscal year.
Council staff will summarize the request, along with any tax provisions affecting philanthropy, in next week's Snapshot.
The Senate Finance Committee discussed nominations to the Department of the Treasury, including Lily Batchelder, who is nominated to be Assistant Secretary for Tax Policy. Ms. Batchelder is a tax policy expert who previously served as chief tax counsel to the Senate Finance Committee. The Committee asked her to discuss the tax gap, IRS funding, and her expectations for President Biden’s tax plan; she repeatedly asserted that she preferred to be fully briefed before making any policy decisions. Ms. Batchelder is expected to be confirmed by the Senate.
House Democrats sent a letter to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig asking them to reverse the Trump administration’s rule eliminating donor disclosure requirements for certain tax-exempt organizations, including 501(c)(4)s. If the rule is reversed, these organizations would have to disclose the names and addresses of donors contributing over $5,000. Under current regulations, which the Trump administration set in 2020, 501(c)(3) organizations must disclose this information to the IRS, but 501(c)(4), 501(c)(5), and 501(c)(6) organizations do not have this same requirement. Senate Democrats sent an almost identical letter to Secretary Yellen and Commissioner Rettig in April.
Also this week, Senate Republicans led by Sen. Mike Braun (R-IN) and Sen. Mitch McConnell (R-KY) introduced the Don’t Weaponize the IRS Act (S.1777). Among other provisions, it codifies the Trump administration’s disclosure exemptions for most 501(c) organizations. For organizations that would still disclose some donors, the bill also increases the threshold at which they must disclose from $5,000 donated in a calendar year to $50,000.
Sen. Sheldon Whitehouse (D-RI), along with sixteen other Democratic Senators, introduced the Paying a Fair Share Act (S.1652). The bill would ensure taxpayers earning over $1 million annually pay at least a 30 percent effective tax rate on income earned from labor, capital gains, and dividends. However, the bill maintains an incentive for charitable giving.
The Department of Education Office of Special Education Programs (OSEP) has announced two new discretionary grant opportunities of interest to grantees of early childhood education, disability innovation, or mental health wellness funders:
Priority #1: Model Demonstration Projects to Develop Identification, Screening, Referral, and Tracking Systems for Infants and Toddlers
Three cooperative agreements will be funded to operate evidence-based model demonstrations related to tracking systems within a local community across health, early care and education, and social service systems.
Priority #2: Model Demonstration Projects to Enhance Social, Emotional, and Mental Health Services and Supports for Middle or High School Youth with and at Risk for Disabilities
Three cooperative agreements will be funded to implement an evidence-based integrated school mental health program for middle school or high school settings to support youth with and at risk for disabilities.
Find other OSEP discretionary funding opportunities here.
The U.S. Department of Agriculture is accepting applications under the Rural Placemaking Innovation Challenge. The $3M in grants is targeted to public or private groups, organizations, or institutions that can help rural communities create plans to enhance broadband access; preserve cultural and historical structures; and support transportation, housing, and recreational development. Interested parties can attend a virtual workshop on June 24; register here. Applications are due by July 26, 2021.
Exclusive from our colleagues at the National Council of Nonprofits.
States Open Tax Codes Despite Federal Concerns
Legislators in at least fifteen states have introduced legislation to adjust tax rates and rebates this year despite an ongoing dispute with the federal government over the interplay between federal grants and state tax cuts. Three state legislatures (Idaho, Iowa, and Oklahoma) are considering or have considered substantial tax cuts to income tax rates, and Georgia and Nebraska lawmakers have already enacted cuts to personal income tax rates. Nebraska legislators are also looking to expand existing income and property tax credits. All of these measures would greatly reduce state revenues next year. Conversely, a bill enacted in New York increases the top marginal tax rate and applies a temporary surcharge to the corporate tax rate. A measure failed this year in Hawaii that also sought to increase tax rates for capital gains and corporate taxes. Under the American Rescue Plan, states cannot use State and Local Fiscal Recovery Funds to pay for tax cuts, but the Treasury Department Interim Final Rule provided some safe harbors that offer states some flexibility. More than a dozen state Attorneys General have filed lawsuits objecting to the restriction on their taxing authority.