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Friday, November 15, 2013
>> Federal: Tax Reform
>> Federal: Budget Conference Committee
>> Federal: Meeting with Elected Officials: A ‘How To’ Guide
>> Consider This: The Scheduling Squeeze
>> Top Reads: Nonprofits and charitable giving are keys to my success
Attention is focused in Washington both this week and next on the tax-writing committees and the budget conferees. Many speculate that lawmakers are mostly done legislating for the year – especially in the House, where big-ticket items like immigration reform and the imposition of an online sales tax have languished for months. Here are the details:
On Wednesday afternoon it became clear that Ways and Means Committee Chairman Dave Camp (R-MI) might walk back his ambitious timeline for marking up a tax reform bill in his committee this year. Chairman Camp acknowledged that the government shutdown in October threw a major wrench in his planning and “that was three weeks [he’d] like to have back. Now [the Committee has] to adjust to changing circumstances.” One such circumstance is the newly-formed budget conference committee, created as part of the deal to reopen the government in mid-October.
We understand that Chairman Camp does not want to introduce legislation before the budget conference concludes its work December 13th, with or without an agreement. The theory is that if he publicly releases a tax reform plan that eliminates loopholes and other provisions, the budget conference could pick up those provisions as ways to raise revenue and use them for their deficit reduction purposes. By waiting until after December 13th, Chairman Camp can keep those tax provisions for his own bill.
The Chairman met with House leaders on Thursday to discuss what, if any, path forward tax reform has in the House this year. While Republicans insist that no decisions have been made, many stakeholders saw the meeting as a sign that House leadership is worried about potential political damage caused by “hard to swallow” provisions in the Chairman’s bill. However, Speaker John Boehner (R-OH) has denied that the meeting was an effort to kill tax reform for 2013.
Movement on the Senate Finance Committee has been equally stalled, despite assurances from Finance Committee Chairman Max Baucus (D-MT) to the contrary. Last week, Chairman Baucus announced that he would be releasing tax reform discussion drafts soon, but nothing has been produced. Sources tell us these discussion drafts will focus on specific topics – most likely one on international tax reform, one on business accounting, and one on tax administration. As of today, there is no plan to release a draft on individual provisions, like the charitable deduction.
The budget conference held its second public meeting on Wednesday, with little progress being made. House Budget Committee Chairman Paul Ryan (R-WI) opened the meeting saying he was hopeful the session would “get the ball rolling” but noted that he and Senate Budget Committee Chairwoman Patty Murray (D-WA) have “been struggling to figure out where [they] agree.” Chairwoman Murray offered a different view, saying that she and Chairman Ryan have had several discussions on the outlines of a potential agreement, making her “very encouraged” and “hopeful [the committee] will get to a bipartisan compromise very soon.”
Chairwoman Murray’s optimism seems to build on an op-ed she wrote for The Washington Post over the holiday weekend, in which she called for closing certain “tax loopholes” in any budget agreement. While a fulsome list of twelve potential tax provisions on the Democrats’ chopping block leaked late last week, she only mentioned eliminating two specifically in her op-ed: one allowing come corporations to receive tax breaks by paying their executives in stock options and bonuses instead of paychecks, and another allowing some multinational corporations to hide foreign subsidiaries and profits from the IRS simply by marking a box on their tax forms. Eliminating just those two loopholes and pairing them with an equal amount of targeted spending cuts would, in her analysis, allow for the replacement of “more than two full years of sequestration’s cuts to education, research, infrastructure, jobs and the military.” The piece did not prompt a response from any Republicans.
While it is encouraging that tax provisions like the charitable deduction were not included on the list of 12, nor Chairwoman Murray’s op-ed, any call to limit so-called tax expenditures outside of tax reform is unsettling. While it remains unlikely that the conference committee reaches a full agreement, we are keeping close eye on its activities.
As you may know, ACR will be participating in the Charitable Giving Coalition’s “Protect Giving Day” on November 20th. Hundreds of front-line nonprofit and charitable sector leaders representing thousands of communities will gather in Washington, D.C. to urge lawmakers to protect the charitable tax deduction. As coalition members fan out across both houses of Congress, what exactly is the most effective approach to ensure your message is clear and requests are understood during these meetings? We asked former Capitol Hill staffers for their advice.
Even if Congress wanted to get things done before the end of the year, we hardly see how under the current schedule that it could. The House is due to be in for just a handful of days in November and eight days in December. And even at that abbreviated schedule, there is talk that they might just fold up their tents and head home for the year before Thanksgiving. One political wag dubbed it a bad case of “senioritis.”
So what does this mean for tax reform? If Congress isn’t in session, getting Committee business done is a lot more difficult. With the pace of tax reform already slowed down by the budget committee negotiations, we are rapidly approaching something close to a snail’s pace in terms of process.
Theories abound as to why the process is moving so slowly. Some believe that Republicans don’t want tax reform to compete with news about the troubled rollout of Obamacare. Others believe that Senate Republicans are slow walking the process in the hope that Republicans will recapture the Senate in 2014, allowing them to can craft a tax reform bill that better suits them under that scenario. There is also a view (and for some a fear) that anything that gets put out by the tax-writing Chairmen may become fair game in the budget negotiations. And on the Democratic side, there is frankly little rank and file interest in tax reform.
In terms of substance we do expect to see some discussion drafts from the Senate Finance Committee before the end of the year and some additional language from House Ways and Means. We just don’t know how Congress – given the current schedule – will find the time to consider tax reform this year in the time we have left.
- Federal: Nonprofits and charitable giving are keys to my success
- Federal: My View: Community Foundation Week Honors Key Organizations
- Federal: Protect Giving Day Is A Lobbying Feast
- Federal: The Basics of Tax Reform and Charitable Giving Incentive
- Local: Guest column: Tax deductions help nonprofits serve 2 million Floridians
- Local: My View: Alexandria Will Suffer If Congress Experiments With Charitable Tax Deductions
- ACR Blog: Meeting With Your Elected Official: A ‘How To’ Guide
- Multimedia: Free to Give: Arthur Brooks on Tax Policy and Philanthropy
- Multimedia: A Conversation with Gary Sinise
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