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An Update on the Tax Issues – Federal and State

With the Senate getting close to a deal on a health care bill, it looks like a final piece of legislation could be sent to President Obama in early 2010.  That means the debate over tax reform will begin in earnest later in the session.  Check out the highlights from an article that appeared in a recent issue of The Hill to get a sneak peak at what may be on the table…

Rangel Planning Major Push for Tax Reform, Says Final Shape of Health Care Bill Unclear

House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) said Dec. 8 he plans to make a major push for tax reform in coming months, and later discussed the issue with Treasury Secretary Timothy Geithner on Capitol Hill.  “We heard from him just his support and his willingness to work with us,” Rangel told reporters following the closed-door meeting between Geithner and Ways and Means Democrats.

In his speech, Rangel said he likely will not start a formal campaign for reform until Congress completes its work on health care reform legislation, but said it is high on his priority list. He said he expects to use the base-broadening approach of his original wide-ranging reform bill, introduced in the last Congress as H.R. 3970, as a starting point.  “I think before the year is out, I'll be able to find out what kind of cooperation we'll be able to get,” he said at a global tax symposium sponsored by PricewaterhouseCoopers LLP.

When asked about tax reform, Rangel said he plans to make that a chief priority headed into next year and wants to start in the near future.  “I am going to try to push to reform the tax code,” he said. “We are going to work to clean up the code. From a legislative perspective, I can't think of anything more important for my committee to be doing.”

He told practitioners that while “I won't start my campaign until after health care,” he will be looking for backing and is expecting support from House Speaker Nancy Pelosi (D- Calif.). Rangel said a key part of his approach will be to continue to seek lower corporate rates.  “There has to be some confidence in the business community that if they give up certain things, they will be rewarded with other things that will help them to compete,” Rangel said. The Ways and Means chairman indicated he may take an approach that would close loopholes in the tax code, at the same time offering incentives for U.S. investment.

He acknowledged in his public remarks that such a reform effort would be “rough to do.” With a variety of crucial issues such as climate control, health care, war, the deficit, and unemployment all demanding attention, “this is not a subject that the country is going to be screaming for. You have to find a way to package it,” he told reporters afterward.  “I have to please a lot of people before I bring out a bill,” Rangel said, adding that he plans to work hard to try to build a consensus on the committee. He noted that he would undertake the reform effort working with Rep. Richard Neal (D-Mass.), chairman of the Ways and Means Subcommittee on Select Revenue Measures.

Meanwhile, in the state of Washington…

Here is the most current information on a potential legislative proposal to remove the fraternal exemption from premium taxes in the Evergreen State:

  • The Joint Legislative Audit and Review Committee (JLARC) report that recommended state lawmakers “re-examine and clarify” the fraternal tax exemption was discussed at a joint meeting of the House Finance and Senate Ways and Means Committees on Friday, December 4. However, there was no specific discussion of the fraternal exemption during this meeting.
  • On January 5, 2010, JLARC will meet again and vote on the proposed report. That meeting will be followed by another joint meeting of the House Finance and Senate Ways and Means Committees to hear the final JLARC report and recommendations.
  • Washington state has serious budget issues and legislators need to close a $2.6 billion budget gap in 2010. Closing this gap will be a top legislative priority in the 2010 session which runs from January 11 to March 11.
  • The budget deal will be the last piece of legislation to be acted on by the legislature, with a flurry of activity likely coming in the final two weeks of the session. However, much of the deal – including decisions regarding which organizations will maintain their tax exempt status – will be made much earlier in the session. That is why prompt mobilization of our grassroots resources is absolutely necessary.
  • The Governor has called for new revenues to close the budget gap. These would be derived from new or increased taxes. Securing enactment of such measures in the legislature will be difficult, however, because individual legislators are fully aware of the potential downsides – i.e. losing their seat in the next election – of passing broad-based tax increases. As such, they may look for other ways – eliminating tax exemptions, etc. – to address the budget gap.
  • Winning this fight will require both on-the-ground local counsel to represent the association before state legislators and an aggressive grassroots/grasstops program. As such, NFCA is in the process of securing a retainer agreement with Mel Sorensen, an experienced local lobbyist, to represent the association for the 2010 legislative session.
  • Based on responses to the letters and materials sent to key lawmakers from NFCA prior to the December 4 meeting, our messages were right on point. We will need to make certain all our grassroots contacts send the same clear and consistent messages to lawmakers and NFCA will provide the materials and training to make that happen.
  • NFCA staff is currently working with several member societies that do business in Washington to identify and quantify their community service activities, determine if any society representatives have existing relationships with key state lawmakers, match society representatives with key lawmakers by district, and identify potential third-parties (charitable organizations that benefit from our financial and volunteer contributions) that may be willing to communicate with legislators on this issue.
  • What we do in Washington state will have an impact on the debate in Washington, D.C. Two key lawmakers from WashingtonSenator Maria Cantwell (D-Wash.) and Representative Jim McDermott (D-Wash.)serve on the main tax-writing committees in Congress. That makes the state battle in Washington even more of a “must win” issue for us.

  • If your society does business in Washington and you think you can help us with this initiative, please contact Elizabeth Snyder, NFCA Director of Advocacy and Public Policy, at esnyder@nfcanet.org

What we do really matters…

Check out some of the following links to learn more about why fraternals still matter in 2009…

Random thoughts on being a transplanted Californian living in Chicago in December…

  • Why any reasonable human would decide to stay here after the first winter is beyond me. DuSable, Marquette, Joliet – what were you thinking?!?!?!
  • If you say “wind chill” to a Californian, they will think you’re referring to some sort of frozen cocktail…
  • Hats and gloves: In California they were fashion accessories; in Chicago they are survival gear…
  • Dorothy clicked her ruby slipper three times and wound up back in Kansas; if I click my flip flops three times will I end up back at Stinson Beach?

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