Giving Incentives Added To Pending Legislation

December 16, 2015       Mark Hrywna      

Key charitable giving incentives would be made permanent, along with dozens of other so-called “tax extenders,” under a measure set to be voted on by Congress this week.

The IRA charitable rollover, an enhanced incentive for donations of charitable easements, and a tax deduction for donating food inventory all would be made permanent. The provision is included in an amendment to the Protecting Americans from Tax Hikes (PATH) Act of 2015. House leaders unveiled the deal late Tuesday night and could vote as early as Thursday. That would be followed by a Friday vote on the $1.1-trillion omnibus spending bill (H.R. 2029, Military Construction and veterans Affairs and Related Agencies Appropriations Act) that will fund the government through the end of the fiscal year (Sept. 30). The two bills might be combined for a Senate vote after they get through the House.

Both the House Ways and Means Committee and the Senate Finance Committee are holding meetings with the lobbying community to make sure there are enough votes to pass the legislation, according to Steve Taylor, senior vice president of public policy for United Way Worldwide (UWW).

Congress has been re-authorizing the tax breaks every few years rather than make them permanent because of the cost. The last time the tax breaks expired was at the beginning of 2014 and a year ago. Congress retroactively extended them for 2014, which didn’t do much for the charitable giving incentives. The measures expired again on Jan. 1. “We don’t expect to generate a lot of gifts in the remaining couple of weeks but it will be a huge deal in 2016 and going forward,” Taylor said. “All the folks who work on charitable giving from retirees will be in a much better position to really expand that segment of givers,” he said.

“This is really positive public policy,” said Neal Denton, senior vice president, chief government affairs officer at YMCA of the USA. “The IRA extension, we’ve been doing it year by year by year. To see this extended to be made permanent, it’s just a great opportunity for nonprofits to work with their donors on gifts that make a difference,” he said.

“It sort of starts to make me wonder about all the things we’ve been excited about Paul Ryan might bear fruit,” Denton said of the new Speaker of the House.

“Most nonprofits would view this tax package as a pretty big victory,” said Taylor. “They got charitable giving incentives and the expansion and extension of pretty big social programs embedded in the tax code,” he said, such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).

President Barack Obama is expected to sign the measures if they get through Congress, Taylor said. The EITC and the CTC are very high priorities for the administration. “I think they see that as a legacy policy for the president and for that reason, they are swallowing a bunch of stuff I think they really don’t like,” he said, namely the dozens of business tax breaks.

The Alliance for Charitable Reform (ACR) issued a statement backing the measure to permanently extend three charitable giving incentives. A project of The Philanthropy Roundtable, ACR also advocated that Congress simplify the private foundation excise tax to a flat 1 percent.

The Committee for a Responsible Federal Budget (CRFB) has come out against making the tax extenders permanent, calling it a fiscally irresponsible deal that costs $780 billion over 10 years and would add $2 trillion to the debt over two decades.

“Just because Congress has routinely extended these provisions in the past without offsets doesn’t mean this irresponsible practice should be formalized,” said CRFB President Maya MacGuineas. “If these tax breaks are worth extending, they are also worth paying for,” she said.

CRFB advocates for Congress to separately consider the omnibus appropriation bill and any deal extending tax breaks. “Keeping the federal government’s door open is not an excuse to jam through a massive deficit-financed tax bill,” MacGuineas said. “The tax extenders package will have significant consequences on revenues and deficits well beyond the next fiscal year. It should get an up or down vote – based solely on its merits — without risking a government shutdown if it is rejected,” she said.

“There’s no one who isn’t concerned at some level about the budget deficit and deficit spending, and where it’s going to take us. There are some in the sector who are really dedicated to budget deficit issues,” Taylor said.

“There will be organizations who are opposed to this package just because it has a negative deficit impact,” Taylor said. While UWW doesn’t have an official position on the deficit, “that doesn’t mean we’re not concerned, but the benefits of this legislation outweigh any concerns about the larger impact,” he said.