House Democrats unveiled legislation Thursday to repeal part of the GOP’s 2017 tax cut bill, saying it raised taxes on churches and nonprofits by asking them to pay a levy on employees’ fringe benefits.
“Taxing tax-exempt organizations — there’s something not quite right about that,” said Majority Whip James Clyburn, who’s leading the repeal effort.
While generally exempt from taxes, houses or worship and nonprofits under the 2017 tax cuts are now required to pay a 21 percent tax on fringe benefits such as transportation subsidies.
Lawmakers and advocates said paying the taxes could siphon funds from the churches’ and nonprofits’ charitable work.
Democrats said Republicans should have known their plan included the tax increase, but they rushed the bill through Congress in late 2017.
“They rammed it through in 51 days and didn’t have hearings and they didn’t know what the consequences of this bill would be,” Rep. Thomas Suozzi, New York Democrat, said. “We didn’t even know about this provision.”
Nathan Diament, the executive director of the Orthodox Union Advocacy Center, said the provision blurred the line between church and state by requiring places of worship to file paperwork with the IRS and have the government monitor their operations to ensure the organizations are complying.
“In the case of our synagogues and all the other churches and houses of worship, it’s an unprecedented breach of the separation of religion and state in this country,” he said.
Mr. Clyburn said repealing the tax would be paid for by raising the corporate income tax rate to 21.03 percent.
He said he has received signs of support from some Republicans, specifically Rep. Jeff Duncan and Sen. Ted Cruz.
While Republicans are wary of raising the corporate tax rate, Mr. Clyburn said the increase is so minuscule that it shouldn’t be a problem.
“I think this kind of stuff cuts across political lines,” he said.