Washington Snapshot: Ways and Means Committee Hearing on 2017 Tax Law, House Fails to Override Trump Veto on National Emergency

In This Week's Edition of Snapshot…

• Ways and Means Committee Hearing on 2017 Tax Law
• House Unable to Override Trump Veto on National Emergency
• State Charitable Giving Incentive Bills Moving Forward

News from the Hill

Ways and Means Committee Hearing on 2017 Tax Law

Yesterday the House Ways and Means Committee held a hearing called the “2017 Tax Law and Who It Left Behind.” The hearing, the first since the 2017 tax overhaul was implemented, lasted over four and a half hours. During the hearing, Committee members on both sides of the aisle took more time stating their position about the tax reform bill than asking witnesses questions.

The hearing mainly focused on the impact that the 2017 TCJA law has had on the economy, and not on the charitable sector. However, important issues, including the Unrelated Business Income Tax (UBIT) that nonprofits and houses of worship will have to pay for offering parking and transportation benefits to their employees, were raised throughout the hearing by Rep. Tom Suozzi (D-NY).

Rep. Dwight Evans (D-PA) said that raising the standard deduction decreased charitable deductions. Witness Ms. Nancy Abramowitz, Professor of Law and Director of the Janet R. Spragens Federal Tax Clinic at American University Washington College of Law, discussed how the increase in the standard deduction might prod people to give to certain organizations, like universities, rather than charities that provide food services to lower income people. She suggested that a study should be done on this possible development.

Chairman Richard Neal (D-MA) closed the hearing saying that the Committee will continue to scrutinize the tax reform bill. More hearings related to the 2017 TCJA are expected.

The Council on Foundations submitted a written statement highlighting the effects that the 2017 tax law is having on the nonprofit sector for the hearing. 

House Unable to Override Trump Veto on National Emergency

The House failed to override President Trump’s veto of the resolution to terminate his national emergency declaration on the U.S.  southern border, leaving the matter to federal courts where several lawsuits challenging the decision have been filed.

A veto override requires two-thirds of support, and the House vote fell short, 248-181. Only 14 Republicans voted with their Democratic counterparts to override the veto. 

President Trump issued this veto, the first of his presidency, two weeks ago. The veto allows the President to continue with his plans to reallocate $3.6 billion in military construction funds toward building a wall along the U.S.-Mexico border. President Trump also plans to use other authorities to transfer $601 million from a Treasury Department drug forfeiture fund and $2.5 billion from a Defense Department drug prevention program, as well as the almost $1.4 billion Congress has already appropriated. 

The resolution of disapproval, H.J. Res. 46, cleared the House and Senate with bipartisan support. Thirteen House Republicans and a dozen Senate Republicans supported the measure, with the move widely interpreted as a rebuke to the President’s immigration policies.

Happening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

State Charitable Giving Incentive Bills Moving Forward

Responding to concerns that the 2017 federal tax law could adversely affect donations to charitable nonprofits and foundations, state legislatures are creating state-based tax incentives. New Jersey, which  currently does not have a state charitable giving incentive, is on the verge of creating a non-itemizer deduction to allow all taxpayers, regardless of whether they itemize or take the standard deduction, to claim charitable contributions on their tax forms. Specifically, the bill would permit a taxpayer to deduct the amount of charitable contributions made to a “qualified New Jersey-based charitable organization” that is equal to the amount allowable as a charitable deduction under federal income taxes. The NJ Senate unanimously approved the legislation on Monday. The NJ Center for Non-Profits is actively advocating for this type of giving incentive, pointing out, “[d]emand for the programs and services provided by charities continues to grow, while needed resources lag behind,” as outlined in the Center’s recent report.

Similarly, lawmakers in Arizona continue to move legislation establishing a non-itemizer charitable deduction. The measure passed the House by a wide margin in February and was approved by a key Senate committee yesterday. Demonstrating the need for the bill, a report by an institute at Arizona State University estimates charitable giving in Arizona will decrease by $272.7 million every year because of the federal tax law that passed in 2017.