November 17, 2017
    IMMEDIATE REACTION: ASAE sees GOP tax cut plan as first step, while charity community more worried

    Delaney: 'Tragically undermine the ability of certain charitable nonprofits to serve our country’s people'

    By Ed Dalere | 11/02/2017

    (First published on Nov. 2, 2017)

    The Republican tax cut plan, released today by the U.S. House Ways and Means Committee, received a cool reception from the charity community, but ASAE sees it as a jumping off point in the quest for tax reform.

    The committee released the plan on Nov. 2, and already Democratic critics say it benefits the wealthy. Earlier in the week, President Trump had met with several association executives and thanked them for helping to forge the tax cut plan. (See related article.)

    ASAE public policy SVP Jim Clarke, CAE, said that the bill is a “first step” in the tax reform process. the associations positions are: “Some provisions in the bill apply directly to the tax-exempt sector and would change the tax treatment of some tax-exempt activities. For example, a provision in the bill would impose a 20 percent excise tax on tax-exempt organizations' compensation in excess of $1 million paid to any of its five highest-paid employees. Another provision stipulates that tax-exempt organizations' income from research is only excluded from [unrelated business income tax] if it's made available to the public.

    “While these provisions will be of concern to some, the tax bill introduced this week is also notable for what is absent in the legislative text. For example, there is no attempt (at the moment) to expand the UBIT statute to tax royalty income or to change the tax treatment of certain qualified sponsorship payments. Sponsorship payments and royalties in particular were identified in the 2014 tax reform discussion draft authored by then-Ways and Means Chairman Dave Camp, R-Mich. That they are not in the bill text introduced in the House is significant.”

    National Council of Nonprofits CEO Tim Delaney said the Tax Cuts and Jobs Act “would tragically undermine the ability of certain charitable nonprofits to serve our country’s people and communities. One proposed provision would drag houses of worship down into the swamp of partisan politics by weakening the longstanding law (the Johnson Amendment from 1954) that prevents political operatives from soliciting nonprofits and houses of worship for endorsements. Another provision would diminish the tax incentive to contribute to the work of charitable nonprofits to all but 5 percent of Americans. Overall, the legislation would cut revenues too deeply, ignoring our nation’s true and necessary expenses and ultimately hurting people.

    Regarding the Johnson Amendment, he said, “Nonprofits don’t want this change. Houses of worship  and faith leaders don’t want this change. Foundations don’t want this change. Law enforcement doesn’t want this change. The Johnson Amendment has served our nation well since President Eisenhower signed it into law. Don’t mess with something that isn’t broken.

    Delaney added, “Even though the talking points on the bill claim to keep the charitable deduction intact, the truth is that doubling the standard deduction puts this important incentive to give out of reach for 95 percent of Americans. To hold nonprofits harmless, instead of a policy that restricts charitable giving incentives to only five percent of taxpayers, Congress should open the incentives up to encourage all Americans to support their local communities through a universal deduction.”

    Independent Sector CEO Daniel J. Cardinali said the bill “hurts charities, our communities, and the millions of families that we serve. “Rather than unlocking more charitable giving to encourage more people to invest in their communities, this bill moves in the wrong direction and only incentivizes a small, wealthy group of people to give," he said. "The bill raises taxes on charities to fund tax cuts to corporations – halting revenue flowing into the sector. As a result, the charitable sector, which is the third-largest employer in the country, will likely see job loss, not job growth.

    “In fact, by raising the standard deduction and not adding the universal deduction, this bill effectively cuts out 95 percent of Americans from access to the only incentive that is altruistic. This is not in the spirit of what we advocated for with the universal deduction, which would have expanded the incentive to 100 percent of all taxpayers. In addition, the elimination of the estate tax is the clearest example of the way this bill shifts resources from charities and our communities to the wealthiest Americans.

    “Further, the Johnson Amendment provision in this bill is dangerous. It opens up places of worship to become an instrument of electoral politics and further blurs the lines between nonpartisan organizations and electioneering.”

    Add new comment

    Filtered HTML

    • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
    • Lines and paragraphs break automatically.
    • Web page addresses and e-mail addresses turn into links automatically.

    Plain text

    • No HTML tags allowed.
    • Web page addresses and e-mail addresses turn into links automatically.
    • Lines and paragraphs break automatically.

    Association TRENDS