Chairman Grassley To Move Another Revenue Raiser?

Tomorrow morning the Senate Finance Committee is scheduled to meet for executive session to consider pending tax legislation. We have just learned that Finance Committee Chairman Chuck Grassley (Republican from Iowa) intends to attach a provision to this bill, which will increase the amount of excise taxes that foundations are required to pay.

Under current law, the net investment income of a private foundation is subject to an excise tax. The provision we expect Chairman Grassley to offer tomorrow, however, would expand the current definition of “capital gain net income” to include gains from the disposition of all assets which produce investment income (e.g. interest, rents and dividends). According to the Alliance for Charitable Reform, this provision “creates an enormous disincentive for private foundations to continue serving their communities. Under this provision, there would be no incentive for these organizations to offer below-market rent to other non-profits rather than other commercial interests. Subjecting these exempt assets to tax removes money from an already limited pool of assets available for charities to serve those in need.”