What We're Tracking in DC
Supreme Court Decisions We’re Following
Earlier this month, the U.S. Supreme Court wrapped up its term, handing down decisions on several cases. The Council has been following two in particular:
Moore v. the United States: The Court upheld a provision of the Tax Cuts and Jobs Act of 2017 known as the mandatory repatriation tax (MRT). The MRT assessed a one-time levy on those owning at least 10 percent of a foreign company on their accumulated earnings overseas. The petitioners argued that the tax was unconstitutional and that they were being taxed on unrealized income because they received no income for their share of the profit. The Court’s 7-2 decision averted concerns that a ruling that struck down the tax could have had wide-ranging implications on the tax code and Congress’s taxing authority.
Loper Bright Enterprises v. Raimondo & Relentless v. Department of Commerce: The Court overturned the 40-year Chevron doctrine. Under Chevron, courts gave deference to a federal agency’s interpretation of laws passed by Congress in instances of ambiguity. Instead, the Court ruled that courts must exercise independent judgement in determining whether an agency acted within its authority, and courts cannot defer to agency interpretation of law because the law is ambiguous. The decision is expected to have sizeable impacts on the regulatory and legislative processes, and Council staff continue to evaluate the potential ramifications for philanthropy as a result.
Ways and Means Committee Considers Tax Legislation
Earlier this week, the House Ways and Means Committee held a markup of four tax-related bills. Among them are two that would specifically impact universities’ tax-exempt status:
- The University Accountability Act (H.R.8914) would penalize universities that have a civil judgement entered against them for violating Title VI of the Civil Rights Act, which prohibits discrimination on the basis of race, color, or national origin. Universities with three violations would risk losing their tax-exempt status.
- The Protecting American Students Act (H.R.8913) would require universities to enroll a greater proportion of American students or risk paying an endowment tax.
The bills were reported out on party-line votes. We continue to track all Congressional activity that impacts the tax-exempt sector and will share updates in future editions of Snapshot.
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