‘Fiscal Cliff” threatens tax deductionsPublished 11:14am Wednesday, December 19, 2012
By Stephanie Carroll Carson
NC News Service
One unintended consequence of fixing the “fiscal cliff” could be a reduction in the tax incentives to make nonprofit donations.
Capping the amount of itemized deductions individuals can claim at around $17,000 is one solution being tossed around in Washington to help solve the budget shortfall. In North Carolina, that amount would just cover the average fixed-cost deductions, including mortgage interest and state taxes paid, and would leave little room for nonprofit contributions.
David Heinen, director for policy and advocacy for with the North Carolina Center for Nonprofits, says that will have a big impact on organizations and consumers.
“It is very clear that if the tax incentives go away, it’s going to significantly reduce contributions to nonprofits from individuals.”
If Congress fails to overcome the “fiscal cliff” by year’s end, automatic cuts to programs would take place, including a $13-million cut to Head Start programs in North Carolina. In addition, there will also be significant cuts to programs because less public money would be available.
The cuts come as nonprofits are being asked for more help from their communities. Heinen says the workload at state nonprofits has increased almost 18 percent.
Sylvia Oberle heads Habitat for Humanity of Forsyth County. She says the issues caused by a reduction in services by nonprofits have a tendency to multiply.
“While we may still have the wherewithal to build houses for families, their own incomes and the services that they receive can be cut back. It really is a trickle-down effect.”
According to the North Carolina Center for Nonprofits, nonprofits employ 11 percent of the state workforce, and cuts to nonprofit budgets would put their jobs in danger, as well.