Fraternal Advantage - June 2007

NFCA Legislative Update

When the 110^th Congress convened in January, the new Chairman of the House Committee on Ways and Means, Charles Rangel (D-New York), decided to dedicate the first few months of the new session to committee organization matters.  As a result of the November elections, Democrats were in control of the Committee for the first time in 12 years, and there were nine new Democratic members of the Committee and two new Republicans.  In addition, there was general agreement that under the tenure of his predecessor, Chairman Bill Thomas (R-California), the atmosphere within the Committee had deteriorated and that a greater degree of politeness and collegiality needed to be established.  As a result, Chairman Rangel was reluctant to work on significant legislation in the first few months of the new Congress, only agreeing to work on a small business tax relief bill to accompany the recently enacted minimum-wage increase.

Now as the new Congress enters the second half of its first session, both Ways and Means and the Senate Finance Committee are in synch and an aggressive agenda is in the immediate future.  Specifically, Congress will consider tax legislation addressing education tax incentives (estimated between $20 and $30 billion), low income housing ($5 billion), the alternative minimum tax ($60 billion), energy tax incentives (possibly as much as $30 billion, but probably paid for by repealing many of the incentives for major oil companies) and extensions of the 15 or so popular tax provisions that expire at the end of 2007, such as the credit for research (potentially $15 billion). 

Under the new rules adopted early in this Congress, any new tax cuts must be offset by tax increases or spending cuts so the $125 to $150 billion in tax cuts that will be considered will require offsets.  The staffs of the tax writing committees are in an aggressive process to find offsets and the two Chairman are indicating that “everything is on the table,” including any offsets that have been considered in the past, but not enacted, as well as potential new proposals.  Repeal of the fraternal exemption proposed as an offset over two years ago by the staff of the Congressional Joint Committee on Taxation is, as a result, in the potential mix.

However, since that time, NFCA has been engaged in an ongoing effort to remind Congress of the value the fraternal exemption and the volunteerism it supports, and the potential damage that would occur if the exemption were taken away.  The campaign also has involved education on the Hill on the nature of the exemption and the fact that it has operated precisely as Congress intended for more than 100 years.  As a result of these efforts, the fraternal movement has new champions on the Hill, who will be engaged if the exemption is threatened in the coming months. 

The threat could come in several forms, either in proposals at the start of committee consideration of a tax bill, or by any proposed amendment that loses revenues must be offset.

For the balance of the year, the NFCA will need to remain engaged and vigilant, and continue the work it has been doing to show Congress why any revenue gained from eliminating the exemption would pale by comparison to what would be lost.



Previous Page