Friday, January 25, 2013

The ACR newsletter is available below or online at www.acreform.com.

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Washington Roundup

President Obama was sworn into office for a second term earlier this week. Following the inaugural festivities, the House of Representatives debated and ultimately passed a bill to increase the federal government's borrowing limit (i.e., the debt ceiling). The Senate schedule was dominated by other hearings but will be turning to budgetary issues.

Debt Ceiling and the Budget

The federal government reached its borrowing limit of nearly $16.4 trillion on December 31, 2012. Since then the Treasury Department has been using “extraordinary measures” to avoid exceeding that debt limit. Secretary Geithner has announced that those measures will be exhausted sometime between mid-February and early March. 

In an effort to address this issue, House Republicans passed a bill, H.R. 325, this week to extend the debt ceiling until May 18th. This is a break with tradition. In the past, Congress has voted to increase the federal borrowing limit by a dollar amount. This House vote signals a new way to address the government’s borrowing limit: not setting a new dollar limit but rather setting a time limit. However, the House bill requires Congress to pass a budget bill by April 15th or salaries for Members of Congress will be suspended.  It is important to note that the Senate has not passed a budget bill in three years so this is really meant to force the Democratic Senate to pass a budget (which will likely include large tax increases).   

As for the Senate, Senator Chuck Schumer (D-NY), a member of the Democratic leadership, announced Sunday on “Meet the Press” that Senate Democrats would develop a comprehensive plan to pass a budget which would include spending cuts and tax reform ...

What does this mean for our nation’s upcoming fiscal issues? (keep reading)

Will We Have Tax Reform This Year?
In short, we don’t know, but leaders in both the House and Senate are keeping tax reform on the table. Earlier this week, House Budget Committee Chairman and former Vice Presidential nominee Paul Ryan (R-WI) reiterated what Ways and Means Chairman Dave Camp (R-MI) said earlier this year: the House will re-write the tax code in 2013. Chairman Ryan also said that this re-write would be “revenue-neutral,” which means that it would not increase tax revenues for the government. 

Democrats are also starting to test the waters on tax reform. Without discussing specific parameters, Senator Schumer said on “Meet the Press” that, in compliance with H.R. 325, the Senate will pass a budget agreement that includes a framework for enacting tax reform by the April deadline. He said, “It’s going to be a great opportunity for us because in our budget that we will pass, we will have tax reform … it’s going to include revenues.”

Consider This

Washington Goes Round-and-Round but Goes Nowhere

Toward the end of the movie "Parenthood" the wise but seriously daft grandmother observes that she'd rather have a marriage like a roller coaster (lots of ups and downs) than a merry-go-round (an endless slow spinning that gets you nowhere).  Over the last few years, the American political system has managed to bring us the worst of both, an unending loop of dramatic highs and lows that have complicated what was already a seriously complex economic recovery.

Moving on to another movie metaphor, why does Washington seem so fixated on creating one perfect storm after another?  Isn't there some other way to do business?

For the time being, it doesn’t look likely... (keep reading)

ACR Blog Roundup

The ACR blog (www.acreform.com/blog) highlights our thoughts on news of the day. For regular updates from our blog, follow us @ACReform on Twitter.

Following are blog postings since our last edition:

The Coming Showdown Over Charitable Tax Incentives and Disincentives
A recent Associated Press article that was picked up by the Washington Post, The New York Times, NPR, US News and World Report and others highlights the coming showdown over charitable tax incentives and how changes may or may not impact charitable giving.

Making Headlines

Charitable Deduction

With a fiscal cliff victory in the rear-view mirror, the charitable community looks ahead to several policy battles with uncertainty about the future of the charitable deduction: the President’s Budget, sequestration, debt ceiling, the continuing resolution to fund the government, and tax reform.

Following is a selection of recent articles since the last newsletter on efforts to protect the charitable deduction:

• 1/16/13 Charities Fear New Tax Law Limiting Deductions for Big Earners as Precursor of Worse to Come, AP/Washington Post
• 1/13/13 Key Players in Fiscal Cliff Tax Issues, Chronicle of Philanthropy
• 1/13/13 How Charities Won a High-Stakes Battle on Donor Tax Breaks, Chronicle of Philanthropy
• 1/13/13 Nonprofits and the Fiscal Cliff: What’s Next, Chronicle of Philanthropy

Charity's Unseen Benefit: In an op-ed for Investor’s Business Daily Benjamin Zycher of the Pacific Research Institute discusses the important role organizations play in society as a “buffer” between the citizenry and the state and the societal implications of changes to tax incentives that encourage charitable giving.

Visit our Charitable Deduction Central for news, opinion, background and updates on the Charitable Giving Coalition’s efforts to protect the charitable deduction.
 

Federal

House Ways & Means: Representative Charles Boustany (R-LA) has been reappointed chairman of the House Ways and Means oversight subcommittee. Boustany, who has voiced concerns about enforcement of charity abuses, held a series of hearings on nonprofit issues in 2012. Also see: Announcement: Chairman Camp Announces Ways and Means Subcommittee Chairmen for 113th Congress

States/Local

Payments in Lieu of Taxes (PILOTs): Inspired by efforts in Boston and other cities, Pittsburgh, PA and Pittsfield, MA are assessing their PILOT programs to secure more revenue from nonprofit organizations in their towns.

New York: In his 2013-14 budget, Governor Andrew Cuomo proposes to extend for three years, a limit on charitable deductions for those with adjusted gross incomes of over $10 million.
 

Comings & Goings (Nonprofit Leadership)

Alliance for Charitable Reform: The Philanthropy Roundtable has announced the appointment of Joanne Florino as its new senior vice president for public policy. Florino will lead the Alliance for Charitable Reform, a project of the Roundtable, and public policy initiatives.

Minnesota Council on Foundations: Bill King, president of the umbrella organization for Minnesota foundations, will retire in June after leading the organization for a dozen years.
 

This Caught Our Eye

Donor Advised Funds: Amidst all of the uncertainty around the charitable deduction and tax rates donor-advised funds (DAFs) experienced a boom in charitable contributions last year. Also see: Donor-Advised Funds Soared at 2012’s Close, Nonprofit Quarterly

America’s Philanthropists: In the Wall Street Journal columnist Amity Shlaes reviews the new book "The Good Rich and What They Cost Us," by Robert Dalzell Jr., which profiles wealthy philanthropists in America’s history. Also see: American History’s Greatest Philanthropists.

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