Compromise tax rates to address the fiscal cliff

by Michelle Saxton
Wednesday, December 12, 2012

Staff photo by Allison Potter 

Aline Lasseter, vice president of development and executive director of the New Hanover Regional Medical Center Foundation, discusses a Draeger VN-500 ventilator with Karl Kaminski, manager of respiratory care at the Betty H. Cameron Women’s and Children’s Hospital, on Wednesday, Dec. 12, in one of the neo-natal intensive care unit rooms. Community gifts enabled the foundation to purchase two of the ventilators for premature babies at a cost of $50,000.

Federal leaders should compromise on tax cuts by allowing lower Bush-era rates to expire for wealthier taxpayers as scheduled without affecting small business owners, a University of North Carolina Wilmington professor has said.

The tax cuts, set to expire Dec. 31, combined with automatic 10-year spending cuts starting Jan.1, are part of the fiscal cliff President Obama, House Speaker John Boehner and other lawmakers were trying to avoid through negotiations.

“The dominant issue right now is to solve the tax rate increases,” Cherie Hennig, professor of accounting and taxation at UNCW’s Cameron School of Business, said Monday, Dec. 10. “That’s the stumbling block before we can get to the second part, which is to control expenditures.”

Different proposals have included extending tax cuts for everyone or extending them for about 98 percent of taxpayers — individuals earning less than $200,000 and couples earning less than $250,000, Hennig said. 

Hennig and professors from Colorado, Ohio and Virginia released a proposal Dec. 10 to let the rate go from 35 percent back to Clinton-era levels of up to 39.6 percent for the top wage income earners, but to protect small businesses by including a 34-percent MAXtax rate on business income.

“Our proposed MAXtax addresses the primary argument by Republican lawmakers that the expiration of the Bush tax cuts would hurt small businesses, thereby impairing job creation and stifling economic growth,” the proposal stated. “At the same time, our proposal allows the Bush tax cuts to expire on the nonbusiness income of high-income taxpayers so the wealthy ‘pay a little more’ to help alleviate the budget crisis in accordance with the Democrats’ position.”  

The proposal was included in Tax Notes, a publication of the nonprofit Tax Analysts in Washington, D.C., and sent to lawmakers.

Meanwhile, across-the-board cuts of about $1.2 trillion could be made in federal defense and domestic spending.

“If somebody loses federal support for food or housing they’re going to need to find -nonprofits that can fill in those gaps,” David Heinen, N.C. Center for Nonprofits’ director of public policy and advocacy, said Thursday, Dec. 6.

Early child care programs are among federal services that could be affected, Heinen said.

“The politicians, they’re kind of shooting themselves in the foot when they do stuff like that,” United Way of the Cape Fear Area President Chris Nelson said Thursday, Dec. 6. “The implications are very serious, long-term, if children are not succeeding in school.” 

Nonprofits also were concerned about a proposal to cap itemized tax deductions.

“We know that’s not the only reason people give to nonprofits, but it is certainly a significant factor in charitable contributions,” Heinen said. 

The New Hanover Regional Medical Center Foundation was talking with donors about hospital needs, executive director Aline Lasseter said Dec. 10, adding foundation funds have helped provide equipment to diagnose severe reflux in children, a heart-lung bypass machine, nursing scholarships, mammography screenings and cholesterol checks. 

“It’s a waiting game,” Lasseter said. “Hopefully … the powers that be will see the necessity of keeping the charitable deduction intact and not jeopardize the nonprofits. We’re the lifeblood — all the nonprofits — in New Hanover County.”

The Arts Council of Wilmington and New Hanover County has not operated long enough to gauge potential fiscal cliff impacts, executive director Rhonda Bellamy said Dec. 10.

“We will probably be able to operate as we intend simply because of the novelty of it,” Bellamy said of the new council that started last December.

The Wrightsville Beach Museum of History has kept its head above water during tough times and supporters have been consistent, executive director Madeline Flagler said Tuesday, Dec. 11.

“It’s something that we have no control over,” Flagler said of the fiscal cliff. “It’s almost like a hurricane; we don’t know if it’s coming or not. We’re just as prepared as can be.”

Cape Fear Museum of History and Science has some nonprofit fundraising but is part of New Hanover County, director Ruth Haas said.

“As the county gets affected by anything that happens with the fiscal cliff we will certainly be affected,” Haas said Dec. 11.

Copyright 2014 Lumina News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


 Email this to a friend    Printable version