Washington Snapshot - August 8, 2013
Up on Capitol Hill . . .
TAX REFORM: RECAPPING THE FIRST HALF Of 2013
It's quieter... August recess has begun. This gives us a chance to reflect on what's happened over the past seven months on the issues we're following:
A House hearing on Valentine’s Day. . .
As you will remember, the House Committee on Ways and Means convened a hearing specifically on issues relating to charitable organizations on February 14th. It was an unusual, extensive hearing that lasted over seven hours with 41 witnesses. We were very fortunate that our Council Board Chair and President of the Berks County Community Foundation Kevin Murphy appeared early in the day on the first panel and testified to stress the importance of the charitable deduction as illustrated in his Pennsylvania communities.
House bipartisan working groups . . .
A day prior to the hearing, Ways and Means Chairman Dave Camp (R-MI-4) and Ranking Member Sander Levin (D-MI-9) created eleven bipartisan working groups. Congressmen Dave Reichert (R-WA-8) and John Lewis (D-GA-5) led the working group studying exempt organizations. The Council and many of our sector colleagues actively participated in this process. The working groups wrapped up their work with a 500 page report released by the Joint Committee on Taxation and detailing the findings of each group. The report did not present subjective assessments of the findings or give priority to one proposal over another.
Closed door staff briefings on the Senate side...
Senate Finance Committee Chairman Max Baucus (D-MT) organized ten closed-door briefings on specific parts of the tax code, including one on charitable organizations. After each meeting an options paper was released by the committee, outlining the ways in which changes could be made to specific parts of the tax code. Like the House side, this paper didn’t give much insight into the Chairman’s plans as possible revisions to the code were outlined nor did it endorse any positions.
Leading to a "blank slate" proposal from Baucus and Hatch...
Much like the Simpson-Bowles Commission did in 2010, Chairman Baucus and Ranking Member Orrin Hatch (R-UT) engaged in a tax reform exercise that stripped all deductions from the code and created a “blank slate.” Baucus and Hatch then asked their 98 Senate colleagues to outline which deductions they would like to put back in the tax code. As we reported in Snapshot, the responses ranged from high-level comments on the principles that should be applied to tax reform to very detailed and lengthy lists of all possible tax provisions that should be included in the bill. The committee pledged to Senate respondents that it would keep their input confidential, so details that we’ve gathered have been from the Senators who released information themselves. It remains to be seen how this input will be incorporated into the draft bill.
During all of this... major distraction invoking the IRS scandal...
As Snapshot readers know, just as tax reform discussions appeared to be heating up and moving forward, key players in the debate had to shift some attention to hearings involving the IRS and its questionable practices around review of (c)(4) applications. Despite the partisan tone that this issue has taken in some forums, it has not stopped the forward momentum of tax reform but has made it more complicated. At some point, the two issues may intersect, and we will continue to monitor and keep you informed.
But "burgers and beer" help maintain friendly, collegial tone during Tax Reform Tour...
Chairman Baucus and Chairman Camp have made an extra effort to foster bipartisan trust during this process, hosting “burgers and beer” lunches at Kelly’s Irish Times. They are taking this down-to-earth style on a Tax Reform Tour that has already had stops in Minnesota, Pennsylvania and New Jersey. These meetings have been closed, and for the most part focused on corporate and small business tax issues, but have been a great springboard to raise awareness about the charitable deduction. The New Jersey stop did generate one of the best quotes so far in the tax reform debate: “get rid of the deductions that don’t affect me,” was the advice that owner Debbie Schaeffer of Mrs. G TV and Appliances offered to Senator Baucus (Washington Post, July 31, 2013).
Today the Chairmen formally announced their visit to the Silicon Valley on August 19 and 20. This stop will focus on "how a simpler and fairer tax code can help spur innovation and boost America's economy" (Ways and Means Press Release). As with past roadshow events, the Silicon Valley stop is expected to be closed to the public. But, it also offers the opportunity for northern Californians to use these events and the media interest they generate to raise federal tax issues important to them.
Does August recess mean that we have a month off? No Way! It's a "Summer of Action"!
Now is a great time to connect with your lawmaker as they spend time in their home states and districts. The Washington Post recently highlighted that advocates are actively taking advantage of the Congressional members’ time back home to reach out and be heard.
Charitable giving incentives remain a front-and-center issue – if you care about these incentives, August recess is a great time to amplify your message. The Charitable Giving Coalition has assembled very helpful materials that you can use to educate your lawmakers.
Research has shown that messages delivered to leaders while they are in the district carry powerful weight. And we know that members are reading their local newspapers while they are at home. The Council team can also help you reach out to media, so if you’d like to join many of your colleagues who’ve authored op-eds, contact us. We’d be delighted to help.
Please contact Brian Horn if you have any questions or need help adapting any of these materials for your community.
Now, on to the next chapter...
Things are going to heat up very quickly on Capitol Hill when lawmakers return on September 9th. There are only nine working days between their return and the end of the fiscal year for the government. If the House, Senate and President can’t come to some sort of resolution, there is the possibility of a government shutdown. The Wall Street Journal outlines some of the debate about linking tax reform to a budget deal and the divisions that would cause within the political parties if this were to happen.
Also on the horizon for the fall is the debt ceiling. While it is not 100% clear when the government will reach its limit on borrowing, right now it is looking like sometime after mid-October.
These issues could complicate tax reform as they will take up the time and attention of the tax writing Committee leaders, and amplify the voice of those in Congress who want to link tax reform to another big issue.
Everything that has happened up to this point (which is a lot) has been preparation for what is about to come. The two committees have learned about as much as they can for now, and will use all that information to begin drafting legislation. The next phase of this will be seeing a first draft of a bill and evaluating how it will impact the philanthropic sector. This process is unpredictable. It can move very quickly, or may seem dead one day and speeding ahead the next. Even the Wall Street Journal wonders “Will Tax Reform Really Happen?” in an article outlining the potential pitfalls the process could encounter in the fall.
Chairman Camp is considering a run for the Senate in 2014. It is unclear what this will mean for tax reform. Some people speculate it would slow down the process since he will need to campaign aggressively.
The Council’s Public Policy team will be closely monitoring all of these moving parts throughout the recess and when Congress returns and will inform you of important developments.
Out Across the Country...
Great op-ed from Cincinnati
Kathy Merchant, president and CEO of the Greater Cincinnati Foundation and Rob Reifsnyder, president of the United Way of Greater Cincinnati co-authored this wonderful op-ed about the importance of the charitable deduction, which was published on Cincinnati.com. The more voices we have raising awareness on our priorities, the better we are.
If you are interested in writing an op-ed for your local paper please contact Brian Horn.
Council in the News
On Tuesday, the Council was highlighted in Politico’s morning newsletter on tax issues. They reported on the letter sent to Chairman Baucus, Ranking Member Hatch, Chairman Camp and Ranking Member Levin, about issues important to foundations.
Next week in Snapshot...
We will go more in depth on how to be effective advocates during this summer recess. Get ready to see some great ideas for op-eds and district meetings. Let’s bring your personal, community stories to Capitol Hill through local media and keep our message on the radar screen.
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.
