Texas Legislative Update Presentation by Robert Pinhero of TANO

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Texas Legislative Update Presentation by Robert Pinhero of TANO

  1. 1. The 2011 Texas Legislative Session: What Happened and What’s Next Robert Pinhero, Vice Chair for Public Policy and Advocacy, Texas Association of Nonprofit Organizations (TANO)A look at the Texas Association of Nonprofit Organizations final legislative reportfor 2011, examining legislation affecting the nonprofit sector as a whole. Inaddition to explaining new legislation, well also take a look at bills that failed topass, since its likely that we will see them again in the future. Find out what oursector needs to do to ensure our voices are heard and how to stay within thelegal boundaries of advocacy and lobbying. Presented at the Texas Nonprofit Summit 2011
  2. 2. 8001 Centre Park Drive, Suite 120 Austin, TX 78754 (512) 381-1490 (512) 381-1499 Fax info@tano.org www.tano.org   82nd Texas Legislature, 2011 Regular Session SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS (as of 7/7/11) Compiled by Richard W. Meyer, Attorney at Law (512) 451-8145 rickmeyer@tano.orgFinal TANO legislative report for 2011: The Texas Legislature ended its 82nd Regular Session on May 30, and numerous bills werepresented as listed here that directly or indirectly affect the interests of nonprofit organizations. Thefollowing summary lists bills and issues that should be of concern to leaders in the nonprofit sector inTexas. Almost 6,000 bills were filed, and the state’s budget challenges occupied most of the legislators’attention during the 140-day Regular Session. The First Called Session was intended to completeunfinished budgetary issues and to consider other special subjects designated by the Governor, and itended June 29. Bills that passed are underlined. A notation in italics following a bill summary indicates the bill’sstatus at the end of the session.Important issues monitored by TANO during the 2011 Regular Session include: • Passage on May 19 of the bill to continue the state’s nonprofit capacity-building task force and inclusion of all stakeholders such as TANO (HB 1965, signed by the Governor) • Concern from nonprofit leaders regarding proposed expansion of the Attorney General’s investigatory authority over nonprofits, foundations and trusts (HB 2921, SB 342—did not pass) • Passage of a bill to protect free speech and advocacy rights of individuals and organizations by permitting an accelerated court review and dismissal of a suit that is determined to be without merit (HB 2973, signed by the Governor) • Passage of a bill that limits disclosures of personal data and internal information that can be required of nonprofits, trusts or foundations that contract with public agencies (HB 3573, signed by the Governor) • Clarification of health laws regulating non-commercially produced food items that are prepared for sale at organization fundraising events, gatherings, or farmers’ markets (HB 1139, HB 2084, HB 3387—bills did not pass) • State legislation to roll back the imposition by local governments of “PILOT” fees (payments in lieu of taxes) on property owned by nonprofit, charitable and religious organizations (SB 714, HB 1022—did not pass). TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS  2
  3. 3. Issues raised in the 2011 First Called Session include: • State revenues generated by purchases of extra-fee specialty auto license plates will not be diverted to the state’s general fund, as proposed in the Regular Session, but will continue to benefit the organization or cause they advocate, thanks to attention to this issue (SB 1, First Called Session, signed by the Governor). • Persons registering as lobbyists for nonprofit organizations will see a 50 percent increase in their annual fee, and those representing Section 501(c)(6) organizations will now be able to benefit from this special registration fee category and reduced reporting requirements (SB 1).Bills considered in the 2011 legislature affected nonprofits in the following areas:*Advancing and regulating nonprofit organizations:HB 1965: The promising nonprofit capacity-building initiative from HB 492 enacted in the 2009legislative session created the Task Force on Strengthening Nonprofit Capacity. Its work will becontinued by HB 1965 along with an expanded Interagency Coordinating Group, now expanded toinclude executives representing 20 large state agencies. Both groups are tasked with improvingcontracting relationships with state government, cooperating and collaborating with community and faith-based organizations, identifying duplications in nonprofits’ activities, and identifying gaps in stateservices that nonprofits could fill. These efforts establish a long-needed “footprint” in the stategovernment realm and advance the nonprofit sector’s importance in public affairs. Passed by House andSenate; signed by the Governor, eff. 9/1/11.HB 2921 (=SB 342) **: Would significantly expand the authority of the Attorney General’s Office toinvestigate the internal operations of charitable organizations, without bringing formal criminal or civilcharges, if the Attorney General has reason to believe that an unlawful act is occurring or is about tooccur. Any charity or foundation could be required to provide, under oath, answers to questionsregarding alleged unlawful activity, produce any document maintained and requested, or have itsrepresentative personally questioned and examined under oath by state investigators. HB 2921 votedfavorably from House State Affairs Committee; no House floor action. SB 342 left pending in SenateBusiness and Industry Committee.SB 587: The Attorney General will have venue to bring a Probate Code enforcement or investigatoryaction in Travis County against a nonprofit entity located anywhere in the state that is claimed to beviolating its duties as a charitable trust. Passed Senate and House; signed by the Governor, eff. 9/1/11.HB 593: The State Auditor would have authority to examine and audit the books and records of anygrantee of federal ARRA “stimulus” funds (American Recovery and Reinvestment Act). No committeeaction.Fundraising activities of nonprofit organizations:HB 457: Charitable organizations conducting raffles will be permitted to expand their efforts with onlinesolicitations to their supporters. Passed by House and Senate; signed by Governor, eff. 5/27/11.HB 1139: Would define and extend state health regulations and permit requirements applicable to a“cottage food production operation”—non-commercial or home-produced food for limited sale— TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS  3
  4. 4. including “…at an event held or sponsored by a religious or nonprofit organization”. Left pending in theHouse Public Health Committee. HB 2084 also defines certain “cottage food production operations” withlesser permitting requirements. Passed committee, no House floor action. HB 3387 would regulatesimilar sales at farmers’ markets. Passed House; left pending in Senate Health and Human ServicesCommittee.HB 372: In this proposed repeal of a remnant of the English common law—the Rule AgainstPerpetuities—charitable giving of high-wealth individuals could be affected. The rule prevents personalwealth from being permanently tied up with trusts or other legal instruments in perpetuity and for thebenefit of limited beneficiaries or heirs. Reported favorably from House Judiciary and CivilJurisprudence Committee; no House floor action.HB 1682: Pressuring or coercing school district employees to participate in charitablegiving activities is prohibited. Passed House and Senate; signed by the Governor, eff. 9/1/11.HB 1806: Regulation of “fishing tournament fraud” and enforcement actions are strengthened. PassedHouse and Senate; signed by Governor, eff. 5/21/11.Amendments to the Texas Non-Profit Corporation Law, Chapter 22, Bus. Org. Code:SB 748: Makes minor changes to the nonprofit corporation law detailing the procedure for an interesteddirector to disclose a conflict of interest to his/her board before acting on a transaction, contract or othermatter. Passed by Senate and House; signed by the Governor, eff. 9/1/11.Amendments to charitable immunity statutes in Chapter 84, Civil Practices and Remedies Code:SB 1846: A nonprofit will be able to access additional types of insurance policies, as well as self-insuredplans, to comply with the financial responsibility requirements of Chapter 84 that entitle the organizationand its leaders to certain immunity against legal claims. Passed Senate and House, signed by Governor,eff. 5/9/11.Various professionals and individuals would be added to the list of persons specifically granted Chapter84 legal immunity while performing voluntary services: Social workers, HB 823, no House floor vote.Licensed family/marriage therapists, SB 1336, no committee action.Exemptions from state taxes now extended to nonprofit entities, and ‘PILOT’ fees:SB 1051 (=HB 1308): A select state review commission would periodically review all credits,exemptions and special treatment under the state’s tax laws. SB 1051, left pending in Senate FinanceCommittee. HB 1308, left pending in House Ways and Means Committee.HB 3201, HB 784: The Texas Sunset Advisory Commission would periodically undertake a re-examination (“sunset”) of all exemptions under the state’s tax laws, including the exemptions fromproperty, sales and business taxes enjoyed by charitable organizations. HB 3201, left pending in HouseWays and Means Committee. TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS  4
  5. 5. SB 714 (=HB 1022): Drainage fees (PILOTs) imposed by the City of Houston on utility-using tax-exempt properties owned by charitable and religious organizations would be banned by state law. PILOTrefers to “payments in lieu of taxes.” SB 714 passed by Senate; no House committee action. On4/6/2011, the Houston City Council passed an ordinance exempting churches and schools from thepreviously-enacted drainage fees, in response to the local public outcry and the state legislationreferenced above. See also HB 3169.SB 609: Property-based municipal drainage fees will not be imposed on housing authority propertiesowned by a municipality. Passed Senate and House; signed by the Governor, eff. 9/1/11.HB 645: An applicant in behalf of a charitable organization’s request for property tax exemption will nothave to list his/her personal identification information on the State Comptroller’s forms. Passed byHouse and Senate, signed by the Governor, eff. 9/1/11.SB 1757: Would amend Tax Code Section 11.18 (which details categories of property uses exempt fromproperty tax) by including academic support for youth, in addition to athletic program support. Nohearing in Senate Finance Committee.Nonprofit board, officer, employment, volunteer and fundraising issues:HB 3252, HB 178, HB 202: Organizations contracting with the state must clear employee status througha federal government-certified data verification service. HB 3252 reported favorably from the HouseState Affairs Committee; HB 178 and 202 left pending. HB 878 includes subcontractors in the requiredverification process. HB 140, no committee hearing. See also SB 84.HB 73: Criminal history checks would be required of all state employees, interns, volunteers, contractorsand subcontractors related to state agency contracting and spending. Left pending in House State AffairsCommittee.HB 1553: Any public agency or nonprofit employer receiving state funds would have to report thecitizenship of any person served by programs. Left pending in House State Affairs Committee.Open meetings / open records issues:HB 3573: Forbids a government entity from entering into a contract with a foundation, trust, or charitableorganization with contract terms that also require the disclosure of the race, religion, gender, nationalorigin, age, ethnicity, marital status, sexual orientation, or political affiliation of persons managing orbenefitting from the foundation, trust or organization. Passed by House and Senate, signed by theGovernor, eff. 9/1/11.SB 1571: Provides that a nonprofit organization that performs a public function is governed byGovernment Code, Chapter 552 (public information disclosure laws). Passed Senate committee, Senatefloor vote never held.SB 1829: Limits the scope of public information laws affecting a chamber of commerce or a nonprofitorganization that provides economic development services to a public agency. Passed Senate; no actionby House State Affairs Committee. TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS  5
  6. 6. Public advocacy / Ethics Commission (lobbying) issues:HB 2973: Provides for an accelerated court review and possible dismissal of a groundless suit against aperson or group advocating for basic free-speech rights. Passed House and Senate; signed by theGovernor, eff. 9/1/11.HB 160: Permits a streamlined court review and dismissal of “slap” suits--harassing or groundlesslawsuit brought against a complaining person or group critical of another interest group, in a publiccontroversy--and determined by the court to be brought to silence the opponent. No committee action.HB 508 (= SB 128): Former legislators would be forbidden from lobbying for two years, except iflobbying for nonprofit organizations, disabilities, and low-income advocacy groups, and if acting withoutcompensation. No committee action on either bill.Nonprofit social service organization and property owner association issues:SB 142: A long and comprehensive bill affecting only property owner associations. Passed Senate; noHouse floor action. See also HB 3347, reported favorably from House Business and Industry Committee.HB 2869, passed by House and Senate, signed by the Governor, eff. 9/1/11. HB 3348, reported favorablyfrom House Business and Industry Committee.HB 2328: Property owner associations would be regulated by the Texas Finance Commission, withannual registration, reporting requirements and governance standards.Reported favorably from House Business and Industry Committee.Other bills:HB 8: Will effectively ban creation of new “land transfer fees” in Texas. These fees are often recordedas part of permanent subdivision restrictions, which subsequently require payment by the seller of apercentage of the sales price to a designated party each time the parcel is resold. The claim by feeproponents that a small percentage of the fee collected is often designated to benefit a local charitableorganization appears outweighed by broad opposition to this hidden fee, which is also the subject ofreview by federal regulators of residential loans. Passed House and Senate; signed by the Governor, eff.9/1/11.HB 1599: Would permit the Texas Corrections Industries (prison industries) to offer its products andservices for sale to nonprofit organizations as well as public agencies. Pending in House CorrectionsCommittee.HB 421: Qualified nonprofit corporations would be eligible to receive ownership of remainder right-of-way properties determined by TXDOT to be unusable for its purposes.No committee action. ___________________________________ TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS  6
  7. 7. *The above list does not include bills introduced relating to the following:Nonprofit hospitals, health care or nursing institutions and plans; credit unions; electric or agriculturalcooperatives; private and charter schools and colleges; cemetery corporations; quasi-public nonprofitentities.**Many bills have an identical “companion” bill in the other house, bearing a different bill number.Access bills, background information, and current status at Texas Legislature Online,www.capitol.state.tx.us ___________________________________*The above list does not include bills introduced relating to the following: Nonprofit hospitals, healthcare or nursing institutions and plans; credit unions; electric or agricultural cooperatives; private andcharter schools and colleges; cemetery corporations; quasi-public nonprofit entities.**Many bills have an identical “companion” bill in the other house, bearing a different bill number.Access bills, background information, and current status at Texas Legislature Online,www.capitol.state.tx.us TANO SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS  7
  8. 8. What is Advocacy?Public support for or commendation of a particular cause or policy. What is Lobbying?Lobbying consists of communications that are intended to influence specific legislation. Lobbying communications are of two kinds—direct and grass roots.A direct lobbying communication is generally one made to either a legislator, an employee of a legislative body, or any other government employee who may participate in the formulation of the legislation.  It must refer to a specific piece of legislation and express a view on it. A grass roots lobbying communication is generally an attempt to influence specific legislation by encouraging the public, other than the organization’s members, to contact legislators about that legislation.  It must refer to specific legislation, reflect a view on it and encourage the recipient to take lobbying action on it. 8
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  10. 10. LOBBYING RULES FOR ELECTING AND NONELECTING CHARITIES Electing Charity Nonelecting Charity 20% of first $500,000 of Less than a “substantial” part of “exempt purpose activities; IRS employs subjectiveLobbying Limits expenditures” and decreasing “balancing” test* percentages after that, up to $1 million cap Count in determining “substantial”Volunteer and other Cost- Do not count against limits onfree Activities lobbyingLobbying Definition Defined, with specific Not defined, no specific exclusions exclusions for invited in statute or regulations testimony; nonpartisan analysis, study & research; self defenseExcessive Lobbying 25% excise tax on excess over 5% excise tax on all lobbyingPenalty for Organization limits in any year expenses if substantial lobbying results in revocationExcessive Lobbying No specific liability 5% if “substantial” lobbyingPenalty for Organization’s willfully or unreasonablyOfficers/Directors authorizedRevocation of Tax Status If lobbying exceeds 150% of If “substantial” lobbying in any one limits generally over 4 years yearRecordkeeping Must document all lobbying Must document all lobbying expenses, both grassroots and activities and expenses direct Numbers only are required: Detailed description of theTax Form 990A grassroots and overall legislative activities and a lobbying expenditures and classified schedule of the percentages of “exempt expenses paid or incurred purpose expenditures” that these expenditures compriseAudit Exposure No difference, whether electing or nonelecting *The factors the IRS will “balance” in determining if lobbying is “substantial” include the importance of lobbying activities to the organization’s objectives and circumstances, the organization’s expenditures on lobbying activities, and the organization’s overall level of spending and activity. 10
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  12. 12. Form 5768 Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make(Rev. September 2009) Expenditures To Influence LegislationDepartment of the Treasury For IRSInternal Revenue Service (Under Section 501(h) of the Internal Revenue Code) Use OnlyName of organization Employer identification numberNumber and street (or P.O. box no., if mail is not delivered to street address) Room/suiteCity, town or post office, and state ZIP + 41 Election—As an eligible organization, we hereby elect to have the provisions of section 501(h) of the Code, relating to expenditures to influence legislation, apply to our tax year ending and all subsequent tax years until revoked. (Month, day, and year) Note: This election must be signed and postmarked within the first taxable year to which it applies.2 Revocation—As an eligible organization, we hereby revoke our election to have the provisions of section 501(h) of the Code, relating to expenditures to influence legislation, apply to our tax year ending (Month, day, and year) Note: This revocation must be signed and postmarked before the first day of the tax year to which it applies.Under penalties of perjury, I declare that I am authorized to make this (check applicable box) election revocationon behalf of the above named organization. (Signature of officer or trustee) (Type or print name and title) (Date) To make or revoke the election, enter b. An integrated auxiliary of a church orGeneral Instructions the ending date of the tax year to which of a convention or association ofSection references are to the Internal the election or revocation applies in item churches, orRevenue Code. 1 or 2, as applicable, and sign and date c. A member of an affiliated group ofSection 501(c)(3) states that an the form in the spaces provided. organizations if one or more membersorganization exempt under that section Eligible organizations. A section of such group is described in a or bwill lose its tax-exempt status and its 501(c)(3) organization is permitted to of this paragraph.qualification to receive deductible make the election if it is not a Affiliated organizations. Organizationscharitable contributions if a substantial disqualified organization (see below) and are members of an affiliated group ofpart of its activities are carried on to is described in: organizations only if (1) the governinginfluence legislation. Section 501(h), 1. Section 170(b)(1)(A)(ii) (relating to instrument of one such organizationhowever, permits certain eligible section educational institutions), requires it to be bound by the decisions501(c)(3) organizations to elect to make of the other organization on legislativelimited expenditures to influence 2. Section 170(b)(1)(A)(iii) (relating to hospitals and medical research issues, or (2) the governing board of onelegislation. An organization making the such organization includes persons (i)election will, however, be subject to an organizations), who are specifically designatedexcise tax under section 4911 if it 3. Section 170(b)(1)(A)(iv) (relating to representatives of another suchspends more than the amounts organizations supporting government organization or are members of thepermitted by that section. Also, the schools), governing board, officers, or paidorganization may lose its exempt status 4. Section 170(b)(1)(A)(vi) (relating to executive staff members of such otherif its lobbying expenditures exceed the organizations publicly supported by organization, and (ii) who, bypermitted amounts by more than 50% charitable contributions), aggregating their votes, have sufficientover a 4-year period. For any tax year in 5. Section 509(a)(2) (relating to voting power to cause or prevent actionwhich an election under section 501(h) is organizations publicly supported by on legislative issues by the first suchin effect, an electing organization must admissions, sales, etc.), or organization.report the actual and permitted amounts 6. Section 509(a)(3) (relating to For more details, see section 4911of its lobbying expenditures and grass organizations supporting certain types and section 501(h).roots expenditures (as defined in section of public charities other than those Note. A private foundation (including a4911(c)) on its annual return required section 509(a)(3) organizations that private operating foundation) is not anunder section 6033. See Part II-A of support section 501(c)(4), (5), or (6) eligible organization.Schedule C (Form 990 or Form 990-EZ). organizations).Each electing member of an affiliated Where to file. Mail Form 5768 to thegroup must report these amounts for Disqualified organizations. The Department of the Treasury, Internalboth itself and the affiliated group as a following types of organizations are not Revenue Service Center, Ogden, UTwhole. permitted to make the election: 84201-0027. a. Section 170(b)(1)(A)(i) organizations (relating to churches), Cat. No. 12125M Form 5768 (Rev. 9-2009) 12
  13. 13. Advocacy StrategiesBe an Informed Advocate Organize a Letter CampaignFind Out Who Represents You Connect Legislators to Local EffortsShare Your Story Work with the MediaMake the Community Connection Make a Legislative Office VisitCommunicate with Your Representatives Testify at the Capitol Become a Direct Action Organizer 13
  14. 14. SummaryU nder current law, taxpayers who itemize deduc-tions may deduct the amount they donate to charities donate to charities and what types of organizations receive those donations. CBO also investigated howfrom their adjusted gross income (AGI) when determin- changing the structure of tax incentives for giving woulding how much they owe in federal income taxes. That affect the tax subsidy (the cost in forgone revenues todeduction gives people who itemize an incentive to con- the federal government), the overall level of charitabletribute to charities. Like other forms of preferential tax giving, and the extent to which different income groupstreatment, the deduction also costs the federal govern- benefit from the tax preference. Specifically, CBO lookedment revenues that it might otherwise collect. At current at 11 options for altering the current income tax treat-levels of charitable giving, the cost of that deduction— ment of charitable giving, which can be grouped intomeasured as the additional revenues that could be col- 4 categories:lected if the deduction was eliminated—will total about$230 billion between 2010 and 2014, according to the  Retaining the current deduction for itemizers butJoint Committee on Taxation (JCT).1 adding a floor.Numerous proposals have been made in recent years to  Allowing all taxpayers to claim the deduction, with oralter the income tax treatment of charitable giving by without a floor.individual donors. Some proposals aim to reduce thecost to the government by imposing a floor (or minimum  Replacing the deduction with a nonrefundable creditlevel) that a person’s charitable giving would have to for all taxpayers, equal to 25 percent of a taxpayer’sexceed to qualify for preferential tax treatment. Other charitable donations, with or without a floor.proposals would extend the current charitable deductionto taxpayers who do not itemize deductions or would  Replacing the deduction with a nonrefundable creditreplace the current deduction with a nonrefundable tax for all taxpayers, equal to 15 percent of a taxpayer’scredit available to all taxpayers who make charitable charitable donations, with or without a floor.contributions.2 For each of the four categories, CBO analyzed twoFor this analysis, the Congressional Budget Office (CBO)examined how much taxpayers in various income groups potential floors: a fixed dollar amount ($500 for single taxpayers and $1,000 for couples filing a joint return) and a percentage of income (2 percent of AGI). Only1. A deduction for charitable contributions also exists under the cor- porate income tax. JCT estimates a much smaller five-year cost for contributions in excess of the floor would be deductible that deduction: about $17 billion. See Joint Committee on Taxa- or eligible for a credit. The analysis uses data for 2006, tion, Estimates of Federal Tax Expenditures for Fiscal Years 2010– the most recent year for which the Internal Revenue Ser- 2014, JCS-3-10 (December 15, 2010), www.jct.gov/publications vice’s public-use sample of individual income tax returns .html?func=startdown&id=3718. is available. The tax treatment of charitable contributions2. Taxpayers can use tax credits to reduce their income tax liability is generally the same today as it was in 2006; however, (the amount they owe). Nonrefundable credits can lower income tax liability to zero, but excess credits cannot be used to increase because of rising incomes and contribution amounts, the tax refunds. In contrast, refundable credits that exceed income tax options that include a fixed dollar floor would have a liability are paid to taxpayers as refunds. somewhat different impact today than presented here. 14 CBO
  15. 15. 10 OPTIONS FOR CHANGING THE TAX TREATMENT OF CHARITABLE GIVING Table 3. Total Donations and Tax Subsidies Under Current Law and Eleven Policy Options, 2006 Change in Total Change in Total Contributions from Tax Subsidy from Floor for Contributions Current-Law Level Tax Subsidy Current-Law Level Eligible (Billions of Billions of (Billions of Billions of Donations 2006 dollars) Dollars Percent 2006 dollars) Dollars Percent Current Law Deduction Available Only to Itemizers No floor 203.0 n.a. n.a. 40.9 n.a. n.a. Options to Change Current Law Keep Deduction Available Only to Itemizers but Add Floor Option 1 $500/$1,000 202.5 -0.5 -0.2 35.4 -5.5 -13.5 Option 2 2 percent of AGI 200.0 -3.0 -1.5 25.2 -15.7 -38.5 Extend Deduction to All Filers Option 3 No floor 205.0 2.0 1.0 46.1 5.2 12.8 Option 4 $500/$1,000 203.8 0.8 0.4 38.4 -2.5 -6.1 Option 5 2 percent of AGI 201.1 -1.9 -0.9 27.8 -13.1 -32.1 Convert Deduction to 25 Percent Nonrefundable Credit for All Filers Option 6 No floor 205.7 2.7 1.3 48.0 7.1 17.4 Option 7 $500/$1,000 204.5 1.5 0.7 38.5 -2.4 -5.8 Option 8 2 percent of AGI 202.0 -1.0 -0.5 29.0 -11.9 -29.2 Convert Deduction to 15 Percent Nonrefundable Credit for All Filers Option 9 No floor 195.2 -7.8 -3.9 27.6 -13.3 -32.6 Option 10 $500/$1,000 194.4 -8.6 -4.2 21.9 -19.0 -46.5 Option 11 2 percent of AGI 193.0 -10.0 -4.9 16.3 -24.6 -60.1 Source: Congressional Budget Office. Notes: The simulation results are for tax year 2006, and all figures are at 2006 levels. n.a. = not applicable; $500/$1,000 = $500 for individual filers and $1,000 for joint filers; AGI = adjusted gross income. Extending the current deduction to all filers or making a $500/$1,000 floor would raise donations by $1.5 billion relatively large nonrefundable tax credit available to all and boost federal revenues by $2.4 billion. Other floors filers would have the opposite effect: increasing both set sufficiently low could be combined with a deduction donations and the tax subsidy. However, CBO’s analysis or a 25 percent tax credit to achieve a similar result. indicates that if either of those approaches was combined with a contribution floor, it would be possible to raise If a much smaller credit for all filers, such as 15 percent, donations while simultaneously reducing the tax subsidy. was combined with a floor, the effect on total donations For instance, combining a 25 percent tax credit with a and the total tax subsidy would be more like that of 15CBO
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