Federal Legislation
Washingtonpost op-ed by Michael Gerson
Michael Gerson criticizes President Obama for his use of the itemized deduction cap to finance government spending at the expense of the non-profit community, the roots of his career.
Gerson notes: “During the last budget cycle, some defenders of this proposal argued that a tax on giving would help the nonprofit sector by funding greater health coverage, which would relieve pressure on nonprofit social service providers. With health reform now on life support, this bank-shot justification is even more absurd. The Obama administration is left with one argument: that the federal government would use the money gained from this tax better than would the private sector. The president is welcome to make this case, but he can no longer simultaneously claim to be a champion of the nonprofit world. This proposal indicates not only an ideological enthusiasm for expanded government but also a disdain for civil society.”
Further Reading
The Charitable Deduction Coalition sends a letter to the White House
On Friday, February 5, 2011, the Charitable Deduction Coalition sent a letter to President Obama asking that the White House reconsider limiting the charitable deduction in the FY 2011 budget proposal.
“As we stated during the healthcare debate, this proposal would create a disincentive for taxpayers who give the most to charitable organizations to continue their generosity. Our nation cannot afford to discourage giving at a time when charitable organizations are facing enormous financial challenges stemming from the economic downturn.”
The entire letter is available below.
Further Reading
Tuesday, March 16, 2010
8:00 am – 12:30 pm
Washington, DC
REGISTER by phone: 202-822-8333
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Charitable tax deduction is back on the chopping block
The President released his FY 2011 Budget this morning. As part of this new budget, as we expected, President Obama again proposed to limit the itemized deduction, including the charitable deduction. The proposal would limit those who earn over $200,000 (singles) and $250,000 (couples) annually to a 28% itemized deduction cap (versus the 33% and 35% rates currently applied to these taxpayers). Unlike last year, however, the funds raised from this proposal would go toward reducing the deficit; last year, the revenue raised from the limitation was set aside for health care reform efforts.
ACR will be carefully monitoring these issues in the coming weeks. While the President’s Budget proposal does not carry the force of law, it does provide a blueprint for Congress to consider when they put together their own budget in the next few months.
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Thune defends the charitable deduction at a critical time
Senator John Thune released a press response to the president’s 2011 budget.
According to the press release, this budget proposal reduces the federal tax deduction for charitable deductions (like President Obama’s budget proposal last year). Notably, Senator Thune was successful in getting his amendment to the FY 2010 budget to preserve the full deduction approved in the Senate by a vote of 94-3 last April. It was eventually stripped from the final budget bill
Thune notes, “At a time when many in our country and around the world are struggling, any action that could limit charitable giving should not be undertaken,” added Thune. “I will continue working with my colleagues to preserve the full deduction for charitable giving.”
ACR will continue to work with Senator Thune who has been a champion for the philanthropic sector in protecting the charitable deduction.
For more on Thune’s work, click the “Thune” tag below.
Further Reading
ACR recaps highlights from the President’s State of the Union Address
Following is a broad summary of the proposals offered by the President (select ‘Continue reading’).
The important take-away from his speech is that the Administration has made a hard pivot away from health care reform, which wasn’t mentioned until half an hour into the speech, toward job creation in a clear effort to win back some of the political favor lost over the last few months. This new focus, combined with his plan to freeze government spending, will no doubt send Congress searching for additional revenue raisers – potentially including higher marginal tax rates for those singles earning more than $200,000 and couples earning more than $250,000.
ACR will be carefully monitoring both the President’s FY 2011 Budget and Congress’ work on the budget for any potential issues relating to the nonprofit sector. As always, we will continue to keep you updated on the latest.
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Future of healthcare reform stands in limbo
The election of Scott Brown on January 20, 2010 to the seat of junior senator for Massachusetts - replacing the late-Sen. Ted Kennedy - represents a potential game changer for the future of healthcare legislation. The election of Brown to the Senate now gives Republicans a “blocking minority” of 41 seats, breaking the previous 60-vote hold that Democrats in the Senate has held up to this point. As such, the status of healthcare reform has been thrown in doubt.
As you know, ACR has been actively working with the Charitable Deduction Coalition to ensure that a limitation on the itemized deduction would not be included in the final healthcare legislation – and have been successful thus far as the provision was not included in either the House or Senate healthcare bills.
As all things healthcare-related are up in the air at this point, ACR will remain vigilant on this important issue as leaders of the House and Senate ponder their next course of action.
ACR’s accomplishments for 2009
As 2010 begins, the Alliance for Charitable Reform takes a moment to reflect back upon a busy and productive 2009 and share new initiatives for the year ahead.
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Quick, bi-partisan legislation allows donations to Haiti relief to be claimed on 2009 taxes returns
Reacting quickly to the Haiti Relief effort, the House and Senate have passed legislation, HR 4462, meant to encourage donations for Haiti earthquake relief efforts. This legislation allows individuals to claim on their 2009 tax returns, a donation made in 2010 for Haiti earthquake relief. The President signed the bill into law on Friday, January 22nd.
Potentially in addition to HR 4462, Senators Charles Schumer (D-NY) and Kirsten Gillibrand (D-NY), have stated their interest in introducing legislation that would temporarily eliminate the 50% deductibility limit for individuals donating to earthquake relief, similar to legislation passed after Hurricane Katrina to encourage additional donations. Currently individuals are allowed to deduct up to 50% of their adjusted gross income in one year. This legislation would also extend the enhanced deduction for charitable food inventory contributions through 2010, which allows companies to deduct the market value of their donation, as opposed to just the cost to produce the food.
New regulations may still affect non-profit ogranizations
In an article today, the Wall Street Journal reported that Senate Banking Committee Chairman Christopher Dodd (D-CT) may be willing to drop the Consumer Financial Protection Agency (CFPA) from the broader financial regulatory reform legislation, in order to ensure the passage of the broader bill with bipartisan support. Aides close to the negotiations have said that in return, Republicans must agree to create a strong consumer-protection division within another federal agency.
What this means for the nonprofit world is unclear. We will have to pay close attention to the directive and authority given to any new consumer division within the Treasury. ACR has been concerned about the current legislation’s expansive definition of “financial activity” (which would be regulated by the proposed CFPA). This definition could draw in nonprofits because of organization’s fundraising efforts (charitable giving advice/planning/donor instruction) or if the nonprofits include any financial education (no matter how basic), credit counseling, debt management, or tax planning (other than return prep) as part of their programming.
ACR will continue to monitor developments on this legislation and will keep you posted on the latest.
It’s not to late share your (or your grantees’) story on how CFPA may affect your work with Congressional offices. Contact us today(.(JavaScript must be enabled to view this email address))!
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Further Reading
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