With no fanfare and little acknowledgement, a bill was passed in the House last week that would offer people who give huge sums of money to politically focused nonprofits a way to avoid paying taxes on those gifts.
As Politico reported, multi-million dollar gifts to organizations like Crossroads GPS — built by Republican operative Karl Rove — NextGen Climate, national labor unions, and the Freedom Partners Chamber of Commerce, which is funded by the Koch brothers, would no longer be subject to a gift tax, should H.R.1104, called the “Fair Treatment for All Gifts Act,” be signed into law.
Those organizations and others like them, categorized by the IRS as nonprofits with political focus — such as a 501(c)4 — are expected to play a large role in 2016. As nonprofits, they are not required to identify their donors’ identities. Donors’ money can then be spent on advertisements promoting or decrying a candidate’s policies, with the identity of the donor never coming to light.
The Koch brothers’ organization alone reportedly intends to spend more than $800 million before the 2016 elections, much of which could be siphoned through The Freedom Partners Chamber of Commerce, Politico reported.
Should H.R.1104 get the president’s signature, gifts made to those organizations would not be subject to tax, allowing big-money political donations a way to avoid scrutiny, critics say.
The bill, however, does have bipartisan support and was passed through the House last week on a voice vote.
Only one of Connecticut’s congressional delegates responded to questions about the bill. When asked why it was not subject to a roll call vote, Laura Maloney, spokesperson for U.S. Rep. Elizabeth Esty, explained that “non-controversial bills” that have been fast-tracked and require a two-thirds majority to move forward “and that enjoy broad support from both sides of the aisle are often voice voted.”
“This bill gives certainty to taxpayers and clarifies existing law for the IRS. That’s something both parties agree on,” Esty said.
The bill, introduced in the House by a cohort of Republicans, is a reaction to actions taken by the IRS that many thought targeted tea party political groups. Current law is not clear as to whether large donations made to political nonprofits can be taxed, and IRS inquiries into the matter have been focused on organizations supporting far-right Republicans, resulting in the introduction of bills like this one.
Rep. Peter Roskam, R-Ill., said on the floor of the House last week that allowing the IRS the ability to threaten nonprofit donors with a gift tax would make those donors reconsider their donation.
“All of a sudden you have donors who say, ‘I don’t know, I don’t know. This is going to be a taxable event. Well, maybe I am not going to give. Or I am going to end up on some list, I don’t know. Or I am going to find my name in the paper in this way, and I don’t want my name in the paper,’” he said. “But the impact and the damage . . . is the same. It has a chilling effect, doesn’t it?”
Senators Support Coast Guard Museum
Connecticut’s two U.S. senators have introduced a resolution that would officially express Congressional support for the Coast Guard museum in New London, which is expected to open its doors in 2017.
The bill, called the United States Coast Guard Commemorative Coin Act, would direct funds obtained from the sale of the Coast Guard Commemorative Coin to support the development and operation of the National Coast Guard Museum via the National Coast Guard Museum Association.
“The brave men and women of the United States Coast Guard should be honored for their service and sacrifice, but to our shock and dismay, they represent the only branch of the United States military that is not yet recognized with a national museum,” U.S. Sen. Christopher Murphy said in a release. “Our bipartisan bill will ensure that we finally have a national museum through which to share the rich history and noble contributions of the United States Coast Guard with the American public, and we urge our colleagues to support this important project.”
U.S. Sen. Richard Blumenthal said the fact that the Coast Guard did not have a museum was unacceptable.
“This measure establishes a historic, learning landmark, recognizing the courageous and steadfast service of the Coast Guard to keep our nation and its people safe and secure,” he said. “Uniquely among the services the Coast Guard lacks is such a museum — an unacceptable lapse.”
Jordan Fenster lives with his family in Fairfield County. He can be reached by or @JordanFenster on Twitter.
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