Washington Snapshot - July 18, 2013

Up on Capitol Hill . . .

Tax Reform

The "blank slate" is still, well, blank...

As Politico notes, it hasn’t been smooth sailing for Senators Baucus and Hatch and the “blank slate” approach to tax reform. Colleagues on both sides of the aisle seem reluctant to submit official letters of support for provisions that they’d like to add to the slate. They are concerned for a number of reasons, like fear of alienating groups by supporting one provision over another, fear of boxing themselves into a corner, and hesitancy to weigh before the whole package is revealed.

As we highlighted last week in Snapshot, one of the major, unanswered questions is whether the Senate tax reform bill will be revenue raising or revenue neutral (last week’s big debate). Clearly, this fundamental question has an impact on how specific tax provisions would be considered. As this week has progressed, we’re seeing signals that Senators will weigh in – either in writing or conversations – but the scope and content of their comments remains a key question.

On Tuesday evening, Politico posted a very short article reporting that Senate Finance Committee Chairman Max Baucus, recognizing the hesitancy of his Senate colleagues, downplayed suggestions that they would skip out on his blank-slate approach to tax reform. On Wednesday, to encourage more candid responses, the Chairman clarified that all requests made to the Finance Committee on this topic would remain private (committee staff members had previously announced that the requests would be made public). Tax Notes reported despite this assurance, several Members remained leery of submitting written requests.

What does this mean?

This current wrangling does not seem to be stalling the process, and we are hearing from Members and senior Hill staff that tax reform has momentum. Though a tremendous undertaking, tax reform has several more chapters in its story. Moreover, we don’t know how the story ends, so we remain vigilant in our efforts to engage in the process, to follow the winding trails, and to identify opportunities for advancing our priorities.

Senator Enzi gives his insight on tax bill timeline and charitable deduction …

Finance Committee member Mike Enzi (R-WY) was quoted at a Senate Committee on Small Business and Entrepreneurship event yesterday: “I don’t think it will begin as [a] completely blank piece of paper,” he said. “I think charitable contributions and home mortgages are pretty sacrosanct. But beyond that, there will be a debate on almost every single piece of the tax code” (Politico Pro, July 18, 2013).

Enzi anticipates that Chairman Baucus and Ranking Member Hatch will focus on collecting input from colleagues and interested parties through the August recess so they can prepare a framework for tax reform in September.

The Charitable Giving Coalition weighs in. . .

As our readers are aware, the Council actively participates in the Charitable Giving Coalition. The coalition has sent a letter to all 100 United States Senators urging them to express their support for the charitable deduction in the “blank slate” process and as tax reform progresses. This letter was highlighted by The Nonprofit Times this week.

And anyone with a stake in tax reform is walking Congressional corridors …

Adding their voices to the mix are hundreds of tax lobbyists. The Hill quotes a manufacturing association leader saying “this is and should be the most-lobbied piece of legislation there is.” With so much at stake, everyone is doing their utmost to make their voice heard. All the more reason why champions for the tax provisions that impact the charitable sector must be sending strong and clear messages to the Hill with meetings, letters, emails, op-eds and other avenues to gain the attention and support of Members of Congress.

IRS Scrutiny

We’re sure we’ll be reporting to you about this for months to come . . .

Scrutiny of the IRS plods along. Today, the Chairman of the House Oversight and Government Reform Committee Darrell Issa brought Inspector General J. Russell George and IRS employees from the Cincinnati office to Washington to testify. Politico’s front page today notes that Democrats have some deep concerns about the IG Russell’s objectivity. He faced heated opening statements from members of the panel.

The Council is watching all of the activity around the IRS scrutiny to determine if and how it will intersect with comprehensive tax reform.

Tax Notes on July 15 highlighted several “fixes” that could impact the nonprofit sector, including moving exempt organization oversight from the IRS to an independent or quasi-independent entity, or keeping EO oversight within the IRS but providing additional, dedicated funding. Proposals like these are not new and, as of today, are not gaining traction. But, we do see some themes emerging. We will assess what those themes mean for our Council members and the philanthropic community at large.

Legislation emerges …

We’re beginning to see which of the many issues in the IRS scrutiny are getting the attention of some in Congress.

Congressman Matt Cartwright (D-PA-17) introduced a bill with twenty Democratic co-sponsors, which includes a limitation of funding for political activity by 501 (c)(4) organizations. HR 2670, the OPEN Act, limits (c)(4)s to 10 percent of their total expenditures for the year, or $10 million for that activity. It would also increase disclosure requirements for entities including labor organizations and corporations. It’s unlikely this bill will gain momentum, but it serves as a helpful signal.

Ways and Means Committee member Peter Roskam (R-IL) introduced four bills, each of which addresses individual issues raised so far in the IRS scrutiny, including disclosures and taxpayer notification: HR 2530, HR 2531, HR 2532 and HR 2533 .We understand that House Majority Leader Eric Cantor (R-VA-7) may attempt to move one or more of the bills to the floor before the August recess, but a vote would be largely symbolic.

The Max and Dave Road Show

Burgers and beer …. That’s what has cemented the relationship between Finance Chairman Max Baucus and Ways and Means Chairman Dave Camp. The Huffington Post outlines how this informal, friendly collegiality over burgers and beer has carried over into their road show stop in Minneapolis with private events at the 3M Company and a fourth-generation small business, Baldinger Bakery. As reported last week, this was the first stop on the Chairmen’s Summer Road Tour. At these stops, discussion focused on corporate and small business tax issues, such as the New Markets Tax Credit. Several media outlets reported that audience members hoped that the bipartisanship shown on the road show would carry over to Congress at large.

The two friends dined in a fancier environment today, side by side at a luncheon hosted by the Economic Club of Washington, as they continued their discussion on the current tax code. They began by outlining the many ways that it’s broken, and emphasized their hopes for a legislative overhaul soon.

Where will the chairmen visit next? We’re hearing Philadelphia late in July, but no further details. We’ll keep our readers posted as we learn more about the visit and offer suggestions on how you can amplify our key messages.

Out Across the Country...

Great Op-Eds that caught our attention

On July 14, Judy Sjostedt, Executive Director of the Parkersburg Area Community Foundation made a strong case to preserve the charitable deduction in the Parkersburg News and Sentinel. This is a great example of using local or regional statistics, in this case West Virginia, to make your story relevant to your elected leaders.

On the same day, an op-ed by Doug Kridler of the Columbus Foundation was published in the Chronicle of Philanthropy. Kridler presents a defense of donor advised funds and makes the case that they should not be singled out for criticism. He notes that much of the philanthropic sector is focused on long term projects and need the flexibility that DAFs provide.

If you are interested in writing an op-ed for your local paper please contact Brian Horn. And, if you’ve posted an op-ed recently, please bring it to our attention.

In the federal agencies...

Agriculture and Housing Agencies Collaborating With Foundations

HUD and the USDA have teamed up with placed based foundations and regional planners and to encourage rural development and community planning. By year end, grants will be awarded in 28 states and will include initiatives such as economic development in multicounty regions to locally grown food initiatives. Check out USDA blog post here for more information.

Keep in touch

Let us know how we are doing, or about any issue that you’d like to see highlighted in a future Snapshot, by touching base with any member of our government relations team.