CBI spends 10 minutes on the line with U.S. Senator Charles E. "Chuck" Grassley
By Jon Feld
State and federal governments are focusing on nonprofit organizations and the unfair competition they often breed, as never before, and, if one man has come to personify the intensified scrutiny, it's Senator Charles E. "Chuck" Grassley. Pick up the Sacramento (California) Bee or the Washington Post, and, if the topic is tax-exempts, the principal source, it seems, is invariably Grassley.
Grassley, who has served in Congress for more than 30 years, not only knows politics intimately, but also has a special affection for small business. He earned his bachelor's and master's degrees in political science at the University of Northern Iowa, and pursued doctoral studies at the University of Iowa. Following school, he worked on his family's farm, and as a sheet-metal shearer and assembly line worker.
He was elected to the Iowa House of Representatives in 1958, to the U.S. House of Representatives in 1974, and to the Senate in 1980. Today, he serves on several committees, most notably as chairman of the Senate Finance Committee and vice-chairman of the Joint Committee on Taxation. His strong views on taxes and unwavering support of small business have allied him with such organizations as IHRSA, Americans for Tax Reform, Citizens Against Government Waste, the National Federation for Independent Business, the Small Business Survival Committee, and the U.S. Chamber of Commerce.
Grassley lives in New Hartford, Iowa, the town in which he was born, with his wife, Barbara Ann; the couple have five grown children.
CBI caught up with him at his office in the Hart Senate Building in Washington, D.C.
CBI: You've long been a strong proponent of tax reform and, when appropriate, tax relief, but many people feel that the tax code still allows many nonprofit organizations to earn income that isn't related to their charitable purpose, giving them, in some cases, an opportunity to compete unfairly with for-profit businesses. Your views on the subject?
Senator Charles Grassley: The tax code should clearly differentiate between acceptable and unacceptable behavior on the part of nonprofits, and the code should be enforced. Nonprofit status is a privilege, not a right, and everyone should regard it as such.
CBI: IHRSA members, who find themselves facing a growing number of tax-exempt fitness providers - from the YMCA, to hospital-owned centers, to church-based exercise programs - are directly affected by, and very concerned about, this problem. How can you and the Finance Committee help?
CG: As the Finance Committee continues to review tax-exempt organizations and consider possible reforms, I'm sure that questions about unrelated business income tax (UBIT) are going to be raised. The proposed reforms that I'm thinking about would build in more accountability - make nonprofits more responsible both to potential donors and taxpayers in general.
CBI: Last year, IHRSA staged its second annual Legislative Summit in Washington, D.C., and, in three months, will return to the capital again; during the Summit, the association's members meet with their senators and representatives to discuss important industry issues. How effective do you think such initiatives can be in influencing public policy?
CG: I've always said that representative government is a two-way street. My job is to represent my constituents as effectively as I can, and that means I have to solicit their thoughts and suggestions. At the same time, they have a real responsibility to communicate their views and concerns to me. IHRSA's Legislative Summit is fulfilling its obligation, as a constituent of Congress, to provide that sort of input, and I encourage everyone involved to keep up the good work.
CBI: IHRSA is currently working with several members in the House and Senate to pass the Workforce Health Improvement Program (WHIP) Act, which would provide for the equitable tax treatment of employee-subsidized fitness services, whether provided on- or off-site. What are your thoughts on WHIP?
CG: I believe in giving employers tax incentives, whenever possible, to encourage job creation, and to attract quality employees. Tax relief to promote health insurance coverage - which might, conceivably, include a fitness component, such as a discount on a club membership - fits into that category. Before committing to any specific tax incentive, however, I'd have to weigh the proposal against other pressing needs; I'd also have to determine whether funds were available to offset the associated costs. The current mindset in the Senate is that tax relief has to be balanced by revenue offset. For instance, we just offset the cost of a comprehensive business tax relief and reform measure by closing a series of loopholes that had fostered abusive tax avoidance.
CBI: Many IHRSA clubs are small businesses. What, if anything, have you been able to do recently, from a tax perspective, to support and strengthen them?
CG: As chairman of the Finance Committee, with jurisdiction over taxes, I've put forward a number of items, over the years, to promote the growth of small business, which have been approved by Congress and subsequently signed into law. Most recently? Well, the 2003 tax law, which I supported, increased the depreciation deduction, and also decreased the tax rate applicable to dividend income for taxpayers, which prompts more investment and growth - for companies of all sizes. And President Bush just signed the business tax bill that I led through the Senate, which extends small business expensing for another two years. This allows small firms to write off as much as $100,000 a year for new business asset purchases, and also contains significant S-corporation reforms that make it easier for small businesses to succeed.
CBI: IHRSA, of course, is interested in the nation's fitness, but it's also interested in that of each individual. How are you doing? What can you tell us about your fitness regimen?
CG: I began running a few years ago, and when I'm in Washington, starting at 5:29 a.m., I run two miles every day, four or five days a week. I encourage staff members to join me, to keep us all motivated and fit. After we run, we have a healthy breakfast of oatmeal and fruit. I generally eat well, but running helps counter the unpleasant side effects of my favorite treat, which is ice cream.
Jon Feld is a contributing editor for CBI and can be reached at kjfeld@rcn.com.
