Friday, October 5, 2012
The latest edition of the ACR newsletter is available below and with full articles online at www.ACReform.com.
Washington Roundup
Following are updates from Washington:
The Presidential Campaign Jumps into the Final Act
The first of three Presidential debates was held Wednesday night at the University of Denver, kicking off the final month of the campaign. Much of the discussion focused on tax policy, and Governor Romney again raised his idea of a monetary cap on all itemized deductions, but did not mention specifics. President Obama criticized Romney’s plan to cut tax rates by 20% across the board at a cost
of roughly $5 trillion over 10 years, but Romney countered by saying "I'm not looking for a $5 trillion tax cut. What I've said is I won't put in place a tax cut that adds to the deficit.” When pressed on how he would cut taxes while not increasing the deficit (referred to as being “revenue-neutral”) the governor said, “ [o]ne way...would be to have a single number. Make up a number, $25,000, $50,000. Anybody can have deductions up to that amount. And then that number disappears for high-income people. That's one way one could do it. One could follow Bowles-Simpson as a model and take deduction by deduction and make differences that way. There are alternatives to accomplish the objective I have, which is to bring down rates, broaden the base, simplify the code, and create incentives for growth."
Romney initially suggested
a cap at $17,000 on certain taxpayer itemized deductions earlier this week . During a radio interview, he said “as an option you could say everybody's going to get up to a $17,000 deduction; and you could use your charitable deduction, your home mortgage deduction, or others — your healthcare deduction. And you can fill that bucket, if you will, that $17,000 bucket that way, and higher-income people might have a lower number." This was the first departure from previous positions on tax reform, where he called for flat-out eliminating most itemized deductions (to help pay for the lower tax rates). On Thursday, Romney aides attempted to put more details behind this idea, saying
the $17,000 cap would be part of a three-pronged approach to broaden the tax base. In addition to itemized deductions, the cap concept would apply to personal exemptions and the tax break for employer-sponsored health insurance as well.
It is important to note that this is still a fledgling plan and the devil is in the details. We expect the Romney campaign to continue to “test” this idea, but not offer any specifics before the election on November 6th.
Consider This
What’s Ahead for Tax Reform
The November 6th elections are just around the corner. If the House remains under Republican control and Democrats retain control of the Senate, what does that say about tax reform?
Frankly there is a lot we don’t know. If the President wins, we don’t know if, or how vigorously, he will pursue tax reform. And while the Chairman of the Senate Finance Committee has held hearing after hearing on tax reform over the last two years, it is unclear what form the President’s version of tax reform will take and whether rank-and-file Democrats in the Senate will be willing to go along for the ride. That leaves the House. And if Republicans are in charge, they’ve been pretty transparent about what they will do. (continue reading)
Making Headlines
Tax Reform/Charitable Deduction
Romney’s Tax Plan: In recent comments on his tax plan, Governor Mitt Romney suggests he would support a cap on deductions, including the charitable deduction, at $17,000 a middle-class family and even lower for higher-income earners. His comments have generated much discussion
within and outside of the sector and criticism. Also see: Romney floats tax deductions cap idea resembling one from Obama, Chicago Tribune and Mitt Romney wants to cap tax deductions. Here are five ways to do it, Washington Post.
Charitable Deduction: With new focus on tax reform, leaders from across the charitable sector are speaking out in defense of the charitable deduction:
Also see: Lower Deductions for Sweet Charities Leave Sour Taste, Fiscal Times
Federal
Fiscal Cliff: The non-partisan Tax Policy Center estimates that tax increases set to occur at the end of the year (due to the expiration of the Bush tax cuts and other tax extenders) amount to $536 billion and will cost
middle-class families about $2,000 each year. Study: Toppling Off the Fiscal Cliff: Whose Taxes Rise and How Much? Also see: Tax impact of impending fiscal cliff could topple economy in 2013, Investment News
In the New York Times, Bruce Bartlett, senior policy advisor for Presidents Ronald Reagan and George H.W. Bush, explains why Congress and the President should allow the Bush tax cuts to expire then enact a retroactive fix as soon as possible, an idea floated by other policy leaders.
Comings & Goings (Nonprofit Leadership)
Indiana University: Gene Tempel, president and CEO of the Indiana University Foundation, will be the founding dean of Indiana University's new School of Philanthropy.
This Caught Our Eye…
401(c)(3)s: Attorney General Schneiderman defends his right to request private tax documents from 401(c)(3)s operating in New York in response to letters from leaders of the tax writing committees in Congress (Rep. Dave Camp, R-MI and Sen. Orrin Hatch, R-UT) demanding that he stop the investigation into organizations. Also see: New York Attorney General Rebuffs Congressional Republicans, New York Times
Giving by Wealthy Donors: A biennial study of high-net worth Americans by the Center on Philanthropy at Indiana University and sponsored by Bank of America finds that 75% plan to give at the same rate or increase giving over the next three to five years. Also see: Wealthy To Increase Or Maintain Charitable Donations, Huffington Post
Impact Investing: The New York Times provides a balanced view of impact investing and social bonds exploring their successes and shortcomings.
Global Grantmaking: Secretary of State Hillary Clinton unveiled a new Global Philanthropy Working Group at the recent Clinton Global Initiative and noted recent changes
in IRS and Treasury rules to reduce the administrative and financial burdens for U.S. grantmakers to engage in international philanthropy. Also see: Remarks at the Launch of the Department of State's Global Philanthropy Working Group
New Blog: Jeff Raikes, head of the Bill & Melinda Gates Foundation, has launched a new blog on the Journal of Philanthropy where he will discuss “a pressing issue at the foundation or addressing some of the challenges and opportunities facing the philanthropic community.”
Upcoming Event
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The Philanthropy Roundtable's 2012 Annual Meeting
The American Spirit of Giving
October 11-12
The Breakers, Palm Beach, Florida
The 2012 Annual Meeting of The Philanthropy Roundtable will offer principled, practical lessons on how donors can make the greatest impact. Come and engage. Come and learn. Come and share.
The Alliance for Charitable Reform will offer programming on public policy issues affecting the charitable sector. ACR sessions and speakers include:
“Taxmageddon:” Renegotiating the Relationship Between Government and the Charitable Sector?
We have arrived at an historic moment. In the upcoming lame duck session, and in the next Congress, lawmakers will struggle with continuing fiscal problems, looming mandatory spending cuts put into place by last year’s “super committee,” and long-awaited reform of the tax code. The prominence of spending and revenue issues in national debates has the potential to reshape the role of government and its relationship with the charitable sector. What is driving this debate? Who are the players? Why is there a focus on charitable giving? What are the implications for the long-standing tradition of private philanthropy? And, most importantly, what can donors do to safeguard the nonprofit sector’s vitality and independence in the face of political forces that could profoundly change its role in society?
Cleta Mitchell, partner, Foley and Lardner
Alexander Reid, of counsel, Morgan Lewis
Sandra G. Swirski, executive director, Alliance for Charitable Reform, and co-founder, Urban Swirski & Associates
William A. Schambra, senior fellow, Hudson Institute, and director, Bradley Center for Philanthropy and Civic Renewal (Moderator)
The Shifting Policy Landscape: What’s Ahead for Donors and Nonprofits?
From city halls to the halls of Congress, debates over where to cut spending and how to find more revenue are changing the traditional roles and responsibilities of donors and nonprofits. Tough fiscal conditions have led lawmakers to question which charities (if any) are really deserving of tax exemptions and tax-deductible contributions, whether we need new rules to constrain board and executive compensation, and to what extent nonprofits can engage in commercial activities. This panel of policy experts will examine the latest policy developments and how philanthropy can prepare for the next big policy challenges.
Gloria Johnson-Cusack, executive director, Leadership 18
Cindy Lott, senior counsel, Nation State Attorneys General Program, Columbia Law School
Pat Read, Pat Read Consulting
Mason Rummel, president and treasurer, James Graham Brown Foundation (Moderator)
Transparency, Accountability, and Effectiveness: What are the Connections?
Private philanthropy continues to be the target of disturbing challenges. Often at the heart of the attack is the misplaced premise that the public, rather than the donor, should determine how funds are spent and has a right to know more about governance, operations and grantmaking decisions. Proponents of increased mandated transparency also draw connections between accountability, effectiveness and the role of government in private grantmaking that may not exist. And, lost in this conversation are important threshold questions, such as: What harm could be caused by a policy of “transparency at all cost?” What are foundations being asked to evaluate? Who is the arbiter of transparency and effectiveness standards? And what are the consequences for failure? This session is part of an on-going series of
discussions by the Roundtable that aim to address nuances of transparency that are often overlooked. An advance version of a new Roundtable monograph on transparency by John E. Tyler III will be available for attendees.
Rick Cohen, national correspondent, Nonprofit Quarterly
Sue Santa, senior vice president for public policy, The Philanthropy Roundtable
Andrew Schulz, executive vice president and national director of community and legal relations, Foundation Source
John E. Tyler III, vice president and corporate counsel, Ewing Marion Kauffman Foundation
For more information: http://www.philanthropyroundtable.org/topic/annual_meeting/
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