Tax Reform Enters Final Phase

The Senate passed its version of comprehensive tax reform early Saturday morning in a 51-49 party-line vote. Senate Republicans were able to secure just enough support to move the tax reform debate into its final phase.

Unfortunately, Senators did not include a a universal charitable deduction in their final bill, meaning that just as in the House-passed tax reform bill, the charitable deduction would only be available to a small percentage of wealthy taxpayers who continue to itemize their taxes. Research has shown that these bills will lead to a loss of billions in charitable giving in 2018 and beyond.

The bill also weakens the federal estate tax, imposes an excise tax on the investment income of private colleges and universities, and ultimately limits the value of executive compensation for nonprofit leaders.

The good news? An amendment was successfully offered and passed to remove a provision that would have reclassified income from a nonprofit’s logo or name as unrelated business income, and a late push by the charitable community ensured that any changes or modifications to the Johnson Amendment were not added to the Senate’s final legislation.

What Happens Now?

The House and Senate have passed two distinct tax reform bills that now need to be reconciled before the two chambers can hold votes on a final tax reform package. This process, known as a conference, is expected to kick off this week with Republican leaders appointing conferees from the House and Senate to work out remaining differences – and it isn’t expected to take much time.

We earned an important victory in keeping a Johnson Amendment repeal or modification out of the Senate bill, but because it remains in the House bill, there will be every opportunity for a repeal in the final tax bill.

Independent Sector and our partners will continue to push Congressional leaders to protect the Johnson Amendment as part this process and will engage the sector as we learn more.

It will be an uphill battle but one we still have an opportunity to influence.

Types: Blog, Policy Update
Global Topics: Congress, Public Policy
Policy Issues: Charitable Deduction, Charitable Giving, Lobbying & Political Activity, Nonprofit Operations, Tax & Fiscal Policy