From Russell M. Robinson, II, a founding partner of Robinson, Bradshaw & Hinson, P.A. in Charlotte:

Our state policy leaders have begun what I hope will be a thoughtful and productive debate about how best to reform our state tax structure.

True reform is essential because our present North Carolina tax structure was adopted eight decades ago, when our economy was substantially different from now. The challenge will be to support the activities that serve “the better angels of our nature” in a manner compatible with sound, economic principles that promote business activity for the benefit of all.

A prominent and fundamentally essential aspect of such reform will be the protection of our tax-exempt nonprofit organizations against encroachments that may diminish their effectiveness or even threaten their existence.

Some such encroachments are obvious, such as the denial or substantial limitation on deductions for charitable donations, or even worse, requirements that would in effect terminate perpetual foundations after a limited number of years. Other encroachments may be more subtle or indirect, such as the collection of the state sales tax from tax-exempt nonprofits, which requires them to submit timely periodic applications for refund, and has even required lawsuits to establish a tax-exempt status that was not reasonably in doubt.

Our country is unique among all nations and cultures throughout the history of mankind in the extent to which the charitable, educational, religious, and artistic needs of our people are served by the voluntary beneficence of us all. The full sweep of such voluntary activity, in all of its ingenious and innovative imaginings, is a marvel and is the envy of the world.

That wondrous range of activity has been engendered and encouraged by our federal and state tax exemptions. It could not in any way be supplanted or matched by government funds collected through taxes. Any encroachment on those exemptions to meet the need of government revenue would invite disastrous consequences.

It would curtail the range and depth of nonprofit activity, reduce the number of people served and eliminate jobs. More fundamentally and longer term, it would undermine our nation’s commitment to volunteer service and begin to replace it with the idea that we can be better served by the various bureaucracies of our federal and state governments.

Eternal vigilance is needed to protect and promote the increasingly important role that our tax-exempt nonprofits play in our increasingly complicated lives.