By Mark Micali, Vice President, Government Affairs, The Nonprofit Alliance, [email protected].
As the 116th Congress draws to a close, let’s recap some of our industry’s key legislative concerns and a peek into what we might expect in the new Congress that convenes on January 3.
First, some good news: The Universal Charitable Deduction.
Importantly, it is now part of the Tax Code with a $300 deduction for 2020 in the statute. The challenge going forward will be making this provision permanent and raising its cap. In September, the Senate considered the Republican “slimmed down” Covid-19 aid package, which included a provision for raising the cap for 2020 to $600 for single taxpayers and $1,200 for married couples filing jointly. While the Senate Republican package failed to receive the necessary 60 votes to proceed toward consideration, these higher cap levels are now part of the legislative history of this issue — a real plus as we move forward. Additionally, the bipartisan Universal Charitable Deduction Bill of Senators James Lankford (R-OK) and Chris Coons (D-DE), with its caps of approximately $4,000 for single taxpayers and $8,000 for married couples filing jointly, continued to gain momentum, with 10 Senators signed onto the legislation.
Looking ahead: Most of the momentum will continue to be with the Senate. Senators Lankford and Coons have real passion on this issue and will work to make the deduction permanent.
Enactment of a robust, comprehensive federal privacy statute.
This is the “big issue,” with ramifications throughout the sector. Given California’s Privacy Statute (CCPA) and the likelihood of other states returning to regular legislative sessions in 2021 and enacting their own state privacy statutes, we face the threat of a “patchwork quilt” of varying and potentially conflicting state privacy laws.
However, getting Congress to enact a comprehensive national privacy statute — a national “Rules of the Road” — addressing data/privacy is no small task. Over the past year, despite the efforts of Senate Commerce Committee Chairman Roger Wicker (R-MS), Senate Commerce Privacy Subcommittee Chairman Jerry Moran (R-KS), and Senate Majority Whip John Thune (R-SD), the effort to enact national privacy legislation has remained stalled in the Senate. The logjam blocking privacy legislation in the Senate is, in no small part, the opposition of the American Association for Justice (formerly, the Association of Trial Lawyers of America or ATLA), the national trade group for plaintiffs’ lawyers. The AAJ and its members are an important Democratic constituency.
Plaintiffs’ lawyers have opposed a national privacy standard, which would preempt state privacy laws. In addition, the Trial Bar has demanded that any litigation relative to a federal privacy statute must be permitted in state courts, as well as in federal court. Allowing such litigation to go to state courts, rather than federal court, would allow “venue shopping” to find the most plaintiff’s lawyer friendly court, undermining the uniformity of enforcement throughout the country that going to federal court would provide.
Interestingly, the situation in the House has been quite different; with Congresswoman Suzan DelBene (D-WA) having a very thoughtful national privacy bill with a clear federal preemption of state laws and the requirement that any litigation go to federal court exclusively. Her bill has 34 cosponsors, all Democrats so far; importantly, four of the Democrats on the DelBene Bill are from California, the home of the CCPA. Looking ahead: Getting a robust, national privacy statute will continue to be a major challenge and we’ll have to see if the Senate can break the logjam on this issue and move forward. However, the effort in the House could accelerate. Congresswoman DelBene will try to make her bill bipartisan by having a number of Republican House members sign on. She is expected to become the Chair of the House New Dems Caucus, a group of 90 moderate House Democrats, giving her an important platform to promote her legislation.
Expanding the IRA Charitable Rollover.
On this issue there have been two very determined advocates, Senator Kevin Cramer (R-ND) in the Senate and Congressman Don Beyer (D-VA) in the House, who have legislation to lower the age of eligibility from 70 ½ to 65 for the establishment of an IRA Charitable Rollover. The upcoming challenge will be to get their legislation into the so-called “Retirement Tax Provisions Package” expected to be taken up by Congress early next year. With 10,000 baby boomers turning 65 each day, this could be an important measure to increase contributions to our sector.
Looking ahead: We should get an “early read” on this issue if it makes its way into the “Retirement Tax Provisions Package” expected to be considered by Congress in the first half of 2021. A major factor as to the fate of this legislation in the House will be the position taken on this legislation by House Ways & Means Committee Chairman Richie Neal (D-MA). At this point, it is unclear how Congressman Neal will act on the IRA Charitable Rollover.
And of course, there is the need to enact structural changes to the Postal Service.
For those who remember the long effort to get the Postal Reform Act of 2006 enacted into law, getting Congress to enact changes to the USPS will be no easy task – it never has been. With the November Election behind us, and with it the many front-page stories involving voting by mail, we anticipate a less partisan discussion of this issue as we move into 2021 and beyond.
Looking ahead: This one is difficult to predict. A number of changes are needed, including moving postal retiree healthcare to Medicare, thus taking this cost burden off the USPS and reducing pressure on raising postal rates. Also being floated, and likely to be given at least some consideration, is creating an annual appropriation meant to underwrite some, or all, of the Service’s “public service” functions (defined broadly as any mandated activity which a for-profit business would not undertake, such as discounting nonprofit mail, maintaining retail post offices which lose money, and six-day delivery).
Adding to the complexity are a number of issues which, when resolved, may spur Congress to take action or persuade them to take none:
- The Postal Regulatory Commission still sits on its proposed rule that would allow USPS to ignore the annual CPI cap and raise rates by as much as 4-7% per year creating a very heavy lift for mailers. If and when the PRC elects to pull the trigger remains to be seen.
- USPS finances are stable well into 2021. But when the threat of insolvency returns (say, a year from now), how will Congress react?
- Will the current Postmaster General survive his rocky introduction to Congress, make a workable peace with the postal unions, and be around to lead USPS through a demanding legislative reform process?
Stay tuned! 2021 promises to be a busy year on Capitol Hill for the nonprofit sector.