Friday, June 15, 2012

Read the latest updates below or with full articles online.

ACR Blog Roundup

Washington Roundup

Staking Positions Ahead of the Fiscal Cliff

As we mentioned in our last newsletter, markers for tax reform are being set ahead of the August recess.  In a speech earlier this week, Senate Finance Committee Chairman Max Baucus (D-MT) outlined his tax reform proposal which he hopes would achieve four goals: increase competitiveness, create jobs, increase innovation and create more opportunity for the working class.  While his plan lacked specifics, it is important to note that he is working on a detailed proposal that he said “would attract bipartisan support.”  More analysis on his speech is included below in the Consider This.

Furthermore, reports have surfaced that the former “Gang of Six” has regrouped and co-founders Senators Mark Warner (D-VA) and Saxby Chambliss (R-GA) convened nearly a third of the Senate to see if they can work out a deal to avoid the full impact of the “fiscal cliff” or “Taxmaggedon”... (Continue reading)

Tax Extenders

Earlier this week, a bi-partisan group of members of the Senate Finance Committee met in a closed-door meeting to review the annual list of expiring tax provisions, known as “extenders.”  In this case, the meeting focused only on provisions applicable to businesses, but we believe individual provisions will be examined in the Senate soon.  Reports say that Committee Chairman Baucus “implored members on both sides of his tax-writing panel to help advance a pre-Election Day package covering an array of business tax breaks…which could cost up to $35 billion depending on the scope of the plan.”  In an effort to expedite the process of such a plan, the Chairman asked that the group focus on business provisions only and “keep the expiring Bush tax cuts, the so-called Buffett rule and other politically charged issues out of the debate.”  Senator Orrin Hatch (R-UT), the ranking Republican on the Finance Committee, is working with Chairman Baucus on the package, but the road ahead will likely be difficult.  Long-time fiscal watchdog and Finance Committee Member Tom Coburn (R-OK) called for a comprehensive review of the tax code and referred to the extenders discussion as “a wasted effort.” ... (Continue reading)

Consider This

From the Chairman: Max Baucus on Tax Reform

Earlier this week, Max Baucus, the Chairman of the Senate Finance Committee, delivered a much anticipated speech on tax reform.  What were our takeaways?

The speech was short on both specifics and surprises.  But Chairman Baucus made clear that tax breaks should be looked through the prism of whether they create jobs or economic growth saying, “We need to get out of the way of the market, unless there is clear evidence that a tax expenditure spurs growth and creates jobs... (Continue reading)

Making Headlines

Charitable Deduction & Tax Reform

Research: The Urban Institute released a new report evaluating the charitable contribution deduction and recent proposals for budget and tax reform (including caps, floors, credits, and grants) that would change the value of the charitable contribution deduction. Report: Evaluating the Charitable Deduction and Proposed Reforms

Recent articles highlighting the assault on the charitable deduction have drawn new attention to the debate over how to treat this giving incentive. The Wall Street Journal explains tax changes and tax reform proposals that may impact the charitable deduction. The Economist provides an international survey of how the tax deduction for charitable gifts is treated in the U.S. and abroad, its justifications, and proposals under consideration to reduce or eliminate it as countries seek revenue to combat debt. Also see: Should the Charitable Tax Deduction Exist?, Nonprofit Quarterly

In related news, Federal Reserve Board Chairman Ben Bernanke warns of a setback to the economic recovery if Congress fails to extend the expiring Bush-era tax cuts and address other tax concerns by year's end.

States/Local

Illinois: As we reported the Illinois legislature passed a measure defining what constitutes charity care and the level of such care nonprofit hospitals must provide to qualify for tax exemption. Some are questioning what impact the bill will have on nonprofit hospital behavior. Also see: One State's Prescription For Hospital Charity-Care Woes, Forbes

Providence: In response to the mayor’s request that Providence's largest tax-exempt organizations increase their voluntary contributions, two more hospital groups have agreed joining a growing collection of significant nonprofits to boost their annual PILOTs to the city.

New York: As we reported, new proposed regulations on limitations to executive compensation and administrative expenses have been unveiled. A legislative and regulatory expert explains the new regulations impacting nonprofit and for-profit entities that receive funds from the state.

Research (Studies & Reports)

Foundation Giving: A new report from the Foundation Center finds that U.S. foundations gave an estimated $46.9 billion in 2011, surpassing the $46.8 billion pre-recession peak of 2008 but down slightly from the previous year after accounting for inflation. Report: Foundation Growth and Giving Estimates (2012). Also see: Foundation Giving Did Not Keep Pace With Inflation in 2011, Chronicle of Philanthropy

This Caught Our Eye…

Philanthropy’s Future: Floyd Keene, president and founder of The Triple EEE Foundation, explores trends that he believes are necessary and will change the nature of the American philanthropy. They include impact investing, new giving models such as L3C corporations and hybrid organizations, the end of perpetuity, collaboration, and corporate philanthropy.

Arts Spending: Americans for the Arts released a new report quantifying the economic impact of arts. Nationally, the industry generated $135.2 billion of economic activity, which supports 4.13 million full-time jobs, and it generates $22.3 billion in revenue to local, state, and federal governments every year. Report: Arts & Economic Prosperity IV.

Nonprofit Tax Exemptions: The IRS recently revoked the tax-exempt status of a 501(c)4 organization, saying the group was “not operated primarily to promote social welfare” and its activities were “primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole”.

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