House Democrats Aim to Repeal Church Tax Hike in Trump Law

(Bloomberg) -- House Democrats are likely to propose a repeal of a controversial provision in the 2017 tax overhaul that imposes a tax on some coveted benefits for employees at nonprofit organizations like houses of worship, according to one Democratic and one Republican congressional aide.

The change, which is to be included in package of tax bills that could be debated as soon as Thursday, rolls back part of the 2017 Republican tax overhaul that increased the burden on tax-exempt groups, including churches, synagogues and mosques.

The list of tax changes to be debated is expected to be released on Tuesday. The two congressional aides asked not to be identified in discussing details of the package that have not been made public.

The law sets a 21% tax rate for nonprofits on so-called fringe benefits -- such as free parking and fare for mass transit -- they provide to employees. Previously, nonprofits didn’t have to pay taxes on the perks.

This provision is one of the few aspects of the overhaul that Republicans and Democrats both want to repeal. Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, has said his party voted to repeal this provision when they were in control of the chamber -- though the repeal died in the process -- and that “we hope that Democrats will follow our lead.”

The change is likely to be a part of a broader package of tax bills that would include some changes that are non-starters for Republicans, including raising the corporate rate to 22% from 21% and expanding the estate tax. A spokesman for Brady did not immediately respond to a question asking if the inclusion of the tax break for non-profits would be enough to prompt Republicans to vote for the bill.

To contact the reporters on this story: Laura Davison in Washington at ldavison4@bloomberg.net;Kaustuv Basu in Washington at kbasu8@bloomberg.net

To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, John Harney

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