Today, the Union of Orthodox Jewish Congregations of America, the nation’s largest Orthodox Jewish umbrella organization, welcomes the House of Representatives Ways and Means Committee’s approval of legislation that will repeal a new tax that would cost houses of worship, charities and other nonprofits as much as $2 billion over the next 10 years.
The Economic Mobility Act of 2019 (H.R. 3300), includes a repeal of a provision in the 2017 Tax Cuts and Jobs Act that added section 512(a)(7) to the federal tax code. The provision imposed a new tax on any nonprofit that provides its employees with fringe benefits related to parking or transportation.
The tax provision, as it stands, potentially entangles houses of worship with the IRS and would compel many synagogues, churches, mosques and other houses of worship to file reports with the IRS for the first time.
Moreover, the new tax would force houses of worship, parochial schools and other nonprofit institutions to divert money budgeted for much-needed programs and services instead to pay the new tax.
The Orthodox Union Advocacy Center has held and led meetings with key officials at the White House as well as U.S. senators and representatives. Additionally, the OU and other groups have been leading a coalition of faith community and nonprofit sector organizations to oppose the new tax provision.
On Wednesday, the OU – along with the National Council of Nonprofits; the American Society of Association Executives; Emory University; and HARC – sent a letter to Ways and Means Chairman Richard Neal (D-Mass.) urging the committee to repeal the tax.
“Taxing nonprofits on basic costs of operating an institution would defeat the purpose of nonprofit status, an American tradition for over 100 years,” the letter states. “Taxing houses of worship would represent a significant challenge to the First Amendment protections of houses of worship.”
OU Executive Director for Public Policy Nathan Diament also submitted testimony to the House Ways and Means Oversight Committee Wednesday in which he outlined the disruptive economic impact caused by the provision:
“As you surely know, most churches and synagogues operate on tight budgets. An average synagogue in my community might have an annual operating budget of about $700,000,” he stated. “But once the salaries are paid, and then utilities, and then, sadly in today’s times – security costs – there is relatively little money left for the kind of social service and community programming a congregation is committed to perform….any funds diverted from the congregational budget are diverted from programs and services for the community.”
Full testimony available here
The legislation will next be considered by the full House of Representatives.
OU President Moishe Bane stated:
“We appreciate the action taken today by the House Ways and Means Committee and its Chairman Richard Neal to support our shuls, schools and other nonprofits. We urge the full House to pass the repeal of the new tax on nonprofits right away.”
OU Executive Director for Public Policy Nathan Diament stated:
“Above and beyond any financial impact, this new provision of the tax code raises a more serious issue of principle by legislating an unprecedented breach in the essential arrangements we have in this country to protect our synagogues, churches and other houses of worship from improper interference by the state.”