Public Policy Update - December 2021


Each month, Philanthropy Southeast provides members with monthly updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Jaci Bertrand, Philanthropy Southeast’s vice president of member engagement, at jaci@secf.org.

 

Federal Aid Promised for Communities Affected by Tornadoes

In the wake of deadly storms and tornadoes that have devastated communities and caused dozens of deaths in Kentucky, Arkansas, Tennessee and other states, the federal government has announced it will provide disaster assistance in counties as they begin what is expected to be a long recovery.

In Kentucky, the state that suffered the worst impacts of the tornadoes, President Biden announced that federal disaster funds will provide 100 percent coverage for debris removal and emergency protective measures for 30 days.

Philanthropy has also stepped up to provide support for communities. The Community Foundation of West Kentucky quickly established a recovery fund that is now accepting donations. The Felix E. Martin Jr. Foundation is also accepting donations to support relief in Muhlenberg County.

More details on how you can support recovery and relief in west Kentucky will be provided in this week’s Connect newsletter.

 

Senate Logjam Makes Year-End Extension of Universal Charitable Deduction Unlikely

The universal charitable deduction that has been in place since March 2020 is at risk of expiring, at least temporarily, while Senate Democrats and the White House continue to negotiate on their version of President Biden’s “Build Back Better” agenda.

Typically, the end of the year sees Congress pass a package of so-called tax extenders, which extends expiring tax provisions into the coming year. However, that package has been delayed while the Senate has been occupied with a debt ceiling fix passed earlier this month and a push by Democratic leaders to pass “Build Back Better” legislation before the end of the year.

For 2021, taxpayers who do not itemize their return are able to deduct $300 ($600 for joint filers) of certain qualified charitable contributions – but Congress has yet to act to extend the deduction into 2022 and beyond.

Ways and Means Committee Chairman Richard Neal (D-MA) acknowledged last week that an extenders bill may be necessary to extend the enhanced child tax credit expiring at year’s end if passage of “Build Back Better” slips into 2022. There are several other expiring provisions, both from COVID relief legislation and the 2017 tax bill, that could be included as well.

 

ACE Act Not Gaining Traction in House

Earlier this year, Sen. Angus King of Maine, an independent who caucuses with Democrats, and Republican Sen. Charles Grassley of Iowa introduced the Accelerating Charitable Efforts Act, which would make significant changes to regulations governing donor-advised funds and private foundations – we provided details on the ACE Act’s provisions in our July update.

While the bill received significant media coverage when it was introduced in the Senate, companion legislation has yet to be introduced in the House, making any action before the end of the year highly unlikely. However, a House bill could be introduced at any time, which would boost the prospects for the legislation in 2022. We will continue to monitor this story and provide updates as needed.

 

Treasury Department to Examine Racial Implications of Stimulus Payments, Tax Policy

On Tuesday, the U.S. Treasury Department announced an enhancement of its data collection efforts aimed at identifying whether and how its policies and programs perpetuate barriers to equal opportunity.

This work, sparked by an executive order issued by President Biden on his first day in office, will begin with an examination of Economic Income Payments that were provided by COVID relief legislation in 2020. “Once this work is completed, we plan to publish statistics on the composition of EIP recipients, including estimates of race and ethnicity and other demographic characteristics,” Deputy Treasury Secretary Wally Adeyemo and Assistant Secretary for Tax Policy Lily Batchelder wrote for the department’s website. The department says the first results of this research will be published next year, with another round of research released in 2023.

The department is also “attempting to develop a general and reliable empirical methodology for analyzing the racial/ethnic equity implications of tax policy and tax administration questions, which could ultimately enable a better understanding of the effectiveness and equity of a variety of tax provisions.”

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