Association Agenda: Lines Drawn on Tax Reform
Both parties continue push for comprehensive tax reform.
There’s widespread agreement on the need for tax reform, but what it would look like differs significantly depending on which side of the political aisle you’re standing on.
While he has previously advocated for a corporate-only tax overhaul, President Obama used his State of the Union address in January to push Congress to raise taxes and fees on wealthy taxpayers and big financial firms to finance tax cuts for the middle class. That plan was quickly dismissed by congressional Republicans as a nonstarter.
Republican tax writers say that any plan to raise taxes, even on the wealthiest taxpayers, will inhibit economic growth. Obama, unbound by political constraints after Democratic losses in last year’s midterm elections, could decide to stand firm in discussions with Congress, or he could pursue a compromise to reshape the tax code and potentially redefine his legacy in his second term in office.
House Ways and Means Committee Chairman Paul Ryan (R-WI) seems to be considering all options, including working on a corporate-only tax overhaul while Obama remains in office and pursuing individual reforms down the road.
For associations and other tax-exempt organizations, there is significant concern that Congress may change the tax treatment for some forms of revenue, such as revenue from royalty income or certain qualified sponsorship payments. Both proposals were part of a tax reform discussion draft released last year by then-Ways and Means Committee Chairman Dave Camp (R-MI). However, Ryan has signaled he intends to put his own stamp on any tax reform plan.
That doesn’t alleviate concerns for associations that could still factor into any tax code overhaul; it just means the issue bears continued watching.