Is the GOP Tax Law Hurting Charities?

Plus, 3 ideas for fixing Social Security By Yuval Rosenberg and Michael Rainey Will the GOP Tax Law Hurt Charities This Year? On this Giving Tuesday — an annual event that began in 2012 to provide a counterweight to the consumption-oriented frenzy of Black Friday and Cyber Monday — some charities are worried that they may receive fewer donations this year due to the Republican tax law that went into effect in January. What’s new this year: The 2017 tax bill significantly increased the value of the standard deduction, reducing the tax payoff of donations for millions of potential supporters, and several studies have projected declines in overall charitable giving in the range of 5 percent. According to the Tax Policy Center, 15 million households will benefit from the charitable deduction in 2018 — a sharp decline from 36 million households in 2017. It may already be happening: Richard Rubin of The Wall Street Journal [says]( that charities are already seeing a difference: “Compared with last year, the number of donors dropped 4.3% while the value of donations increased 2.6% through Sept. 30, according to a study released Tuesday by the Association of Fundraising Professionals.” The rich vs. the middle class: The tax law may simply accelerate a trend that has been happening for years: The rich have been giving more to charity, while the middle class has been giving less. Quentin Fottrell of MarketWatch [says]( that, “In the early 2000s, households earning $200,000 or more made up only 30% of all charitable deductions. By 2017, this group accounted for 52%. And the percent of charitable deductions from households making over $1 million grew from 12% in 1995 to 30% in 2015, according to a study of tax filings by the Institute for Policy Studies, a left-wing think tank.” But charity has its own rewards: No one really knows how sensitive charitable donations are to changes in tax law, and many people make donations based on need rather than economic considerations. As a result, it may take a few years to see the ultimate effect. “It’s a very individual basis, and we’re not going to know the answer to this until 2020 or 2021,” Robert Sharpe, a consultant who works for nonprofits, told the Journal. “Right now, only the most sophisticated people have talked to their advisers about the impact.” Government Shutdown Watch: Will Trump Dig in His Heels Over Wall Funding? The federal government still faces the possibility of a partial shutdown after December 7 unless Congress and President Trump can agree on the seven appropriations bills that need to be finalized for fiscal 2019. Trump’s demand for $5 billion for a border wall remains the key sticking point, with both sides reportedly refusing to bend in bipartisan spending talks so far. How the talks play out from here will depend on Trump. House Republican leaders were heading to the White House Tuesday afternoon to discuss strategy, Politico’s John Bresnahan, Burgess Everett and Sarah Ferris [write](. One option [raised by Republicans]( is to provide the $5 billion, but over two years: “The White House’s top priority now, according to multiple Senate Republicans, is guaranteeing several years worth of wall construction before the GOP loses full control of Congress. Republicans have internally floated perhaps spreading the $5 billion over two years, but the White House realizes once Democrats take the House that deal may fall apart, said Sen. Marco Rubio of Florida.” Senate Minority Leader Chuck Schumer (D-NY) [said Tuesday]( that Democrats oppose including more than $1.6 billion, the amount provided by the Senate’s Homeland Security spending bill, for border security and the wall. This weekend’s clashes between migrants and U.S. law enforcement officials at the Mexico border have complicated the negotiations, The Hill’s Alexander Bolton [reports]( “Before border authorities turned to tear gas on Sunday to turn away migrants rushing the border, many lawmakers and aides on Capitol Hill thought Trump would likely sign funding legislation to prevent a shutdown, even if it represented a watered-down border security package. The ugliness on Sunday, Republicans say, is only likely to convince Trump to dig his heels in harder on more funding for the wall.” Republicans Unveil Lame-Duck Tax Bill House Republicans unexpectedly introduced a nearly 300-page tax bill Monday evening, with the goal of passing the legislation during the lame-duck session of Congress. Ways and Means Committee Chair Kevin Brady (R-TX), who will step down in January as Democrats take the reins, said he hoped the bill would be voted on quickly and sent to the Senate. The bill ([click here for the full text]( contains provision that would: - correct technical errors in the 2017 tax law - provide tax relief for disaster victims - phase out take breaks for biodiesel and renewable diesel - extend a longer list of other tax breaks, including those related to renewable energy, railroad maintenance, economic development in American Samoa, “motorsports entertainment complexes” and some racehorses - tweak the rules for IRA and 401(k) retirement accounts - restructure some parts of the IRS. One thing the bill does not do is extend the 2017 bill’s individual tax cuts, which are scheduled to expire in 2026. And Brady did not provide an estimate of how much the bill would cost. What comes next: A Republican aide [told]( The Hill that the bill could receive a vote on the House floor within the next few days, but even if Republicans have enough votes to pass the bill there they will need support from Democrats to get it through the Senate. The reaction from one Democrat, Sen. Chris Van Hollen (MD), suggests the bill is in for a rough ride: “It was sort of put together in the same way their huge tax bill was put together, in the dark of night.” House Democrats are expected to hold hearings on the 2017 tax bill and any potential adjustments next year, and Senate Democrats may prefer to wait to see where their efforts lead before passing any further tax legislation. 3 Ideas for Fixing Social Security Social Security’s trustees reported earlier this year that the program [will spend more than it collects in 2018]( requiring it to tap into its $2.9 trillion trust fund to cover benefit payments. It’s the first time since 1982 that’s happened — and, as America’s population ages, it will keep happening until the trust fund is depleted in 2034, the trustees estimated. That doesn’t mean Social Security will completely run out of money — it is funded primarily by a dedicated payroll tax — but it does mean changes are necessary to keep retirees from facing a 23 percent reduction in benefits after 2034. “There’s a problem, but not a crisis,” Andrew Eschtruth, a researcher at the Center for Retirement Research at Boston College tells [The New York Times](. “It’s something policymakers have acted on before, and the program has always paid full benefits.” Oft-discussed possible changes include raising the payroll tax, lifting the cap on earnings subject to that tax ($132,900 as of 2019), raising the eligibility age for collecting benefits or cutting benefits for retirees, or perhaps a subset of high earners. The Times’ Paula Span [highlights]( a number of adjustments that could be made to shore up Social Security’s finances and also update the program for our times: 1. Raise the retirement age. An [Urban Institute study]( published this month looks at the pros and cons of raising the Social Security retirement age. Raising the retirement age would reduce the program’s projected shortfalls, and it “would also encourage many older people to work longer, increasing income tax revenue for federal and state governments,” Urban’s Richard W. Johnson writes. But such a change would also create hardships for retirees, especially those with health problems that limit their ability to work, meaning that additional changes to protect those people would be necessary. Even then, the report says, but it “seems unlikely” that those additional policy steps “could fully protect all vulnerable older adults.” 2. Expand benefits. Sen. Bob Casey (D-PA) “[has introduced legislation]( intended to help widows, widowers and divorced spouses qualify for higher payments and receive benefits earlier if they’re disabled,” Span says. 3. Help women catch up. Another idea is to award Social Security work credit to people who leave the labor force to be caregivers at home. “[Legislation introduced by Senator Chris Murphy]( Democrat of Connecticut, last year would incorporate caregiving when calculating a person’s future Social Security benefits. To qualify, a person would have had to provide 80 hours of care a month to a ‘parent, spouse, domestic partner, sibling, child, aunt or uncle’ who needed assistance with daily activities. The caregiver would be credited with a modest wage for up to five years.” News - [Trump Moves to Lower Medicare Drug Costs by Relaxing Some Patient Protections]( – New York Times - [Trump Threatens to End GM Electric-Car Subsidies]( – Bloomberg - [Pharma Makes a Last-Ditch Lobbying Effort to Save $4 Billion]( – Washington Examiner - [Tariffs Could Cost American Households $2,400 Each in 2019, New Study Warns]( – CNBC - [The Road to a Spending Showdown Is Paved With Cigars, Guns and Horses]( – Roll Call - [House Democrat Says Ways and Means Panel Will Revisit Taxes, Infrastructure]( – Associated Press - [Another Warning Sign That the U.S. Economy Will Slow Next Year]( – Bloomberg - [More Health Insurers Refusing to Pay ER Bills]( – CBS News - [Divided Government Unlikely to Deliver Any Real Health Care Reforms, Former Permanente CEO Says]( – The Hill - [Generic EpiPen Not Any Cheaper Than Existing Version]( – The Hill - [UnitedHealth Group Says 2019 Revenues Will Eclipse $240 Billion]( – Forbes - [Medicaid Privatization Savings in Iowa Barely Half What Was Projected, Audit Finds]( – Associated Press - [Ohio Becomes First U.S. State to Allow Businesses to Pay Taxes with Bitcoin]( – HuffPost - [One of America's Richest Suburbs Just Lost Its AAA Rating]( – Bloomberg Views and Analysis - [Will Donald Trump Stand Up to Seniors on Drug Prices?]( – Max Nisen, Bloomberg - [When Higher Taxes Brought Americans Together Instead of Dividing Them]( – Ajay K. Mehrotra, Washington Post - [GM Layoffs Show Congress Played Americans with Corporate Tax Cut]( – Chris Macke, The Hill - [Republicans Shouldn't Embrace ACA Rules About Pre-Existing Conditions]( – Headley Heath Manning, The Hill - [Raise Rates Today to Fight a Recession Tomorrow]( – Martin Feldstein, Wall Street Journal (paywall) - [How the Tax Cuts and Jobs Act Reduced the Value of the Child Care Credit]( – Elaine Maag, Tax Policy Center - [A Space Force Is Worth the Price]( – Todd Harrison, The Hill - [Why GM Is Likely to Keep Producing in China Despite Trump’s Pleas]( – Trefor Moss, Wall Street Journal (paywall) - [Bigger Federal Budget Deficit Needs Attention]( – Tampa Bay Times - [Home Health Legislation Could Strengthen Payment Reforms, Protect Patients]( – Tim Rogers, Morning Consult - [Obamacare Is Having a Surprisingly Good Year]( – Sarah Kliff, Vox - [Cost-Sharing and Drug-Price Transparency in New York]( – Chris Pope, Manhattan Institute - [When Blue Chip Companies Pile on Debt, It’s Time to Worry]( – William D. 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