Nonprofits have vowed to fight a Senate plan that would eliminate incentives for individuals to donate and put a cap on the amount that charities can receive in sales tax refunds.
The Senate plan calls for eliminating itemized deductions on state income taxes, including charitable deductions.
At a news conference Wednesday, officials with the N.C. Center for Nonprofits directed much of their criticism at the proposed sales tax cap, which would impact larger nonprofits like universities and hospitals.
Currently, such large nonprofits recoup millions spent annually on sales taxes. The Senate plan would cap those refunds first at $5 million in 2014, then $1 million in 2015, and finally $100,000 in 2016.
The Center for Nonprofits says about 250 of the state’s 10,000 nonprofits would feel the pinch of the cap, resulting in possible cutbacks in programs and staff layoffs.
However, the proposal comes at a time when nonprofit hospitals have been under scrutiny for amassing billions of dollars in reserves while paying their executives millions.
State leaders say additional revenue generated by cutting sales tax refunds to nonprofits could be used to reduce the overall rates for sales taxes, personal income taxes and corporate income taxes.
Nonprofit leaders complain the impact will be felt far beyond hospitals, however.
Examples include churches and facilities for the elderly that might plan on construction, expansion or renovation projects, nonprofit leaders say. Refunds paid on sales taxes paid for building materials would shrink.
“The nonprofit sector is unified in its belief that the Senate tax plan will result in substantial program cuts, reduced services, and job loss in nonprofits, which will be felt in communities across the entire state,” said David Heinen of the Center for Nonprofits.
Joining Heinen at the Wednesday press conference were representatives from High Point University, Vidant Roanoke-Chowan Hospital, Elon University and Hospice of Wake County.
Nido Qubein, president of High Point University, urged lawmakers to recognize how colleges and universities boost economic success for the state, including bringing in jobs.
“When you talk about taxing nonprofits, you are talking about cutting services, because we have to make up the money somehow,” Qubein said at the press conference.
“It would mean cutting scholarships or jobs or cutting programs.”
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