January 22

Bill Nemitz: Maine’s new deductions cap bad news for big donors, Grandma

(Continued from page 1)

Maine Revenue Services is going after Grandma? Who knew?

“It’s news to me,” said state Sen. Anne Haskell, D-Portland, who co-chairs the Legislature’s Taxation Committee, in an interview on Tuesday.

To be fair, the cap on deductions never crossed the doorstep to Haskell’s committee when it sailed into Maine’s tax code back in June. Rather, it was proposed by the LePage administration and accepted by the Appropriations Committee (and subsequently a majority of both legislative chambers) as they hammered out a budget deal aimed primarily at bringing Maine into compliance with recent federal tax changes.

“Had there been an extensive public hearing, some of that stuff may have come out at that time,” noted Haskell. However, “as far as I know, (the Appropriations Committee) didn’t hear that kind of public testimony.”

Which brings us to L.D. 1664, a bill scheduled for a hearing Wednesday afternoon before Haskell’s Taxation Committee. It’s intent: exempt charitable donations, at least, from the cap on deductions.

Explained Sen. James Boyle, D-Gorham, the bill’s sponsor, “In a sense, we’ve cut the legs out from under a number of the nonprofits that rely on (donations) as a primary source of funding.”

Among those who plan to second that motion at the hearing is Brenda Peluso, director of policy and operations for the Maine Association of Nonprofits.

Using Maine Revenue Service data from the 2010 tax year, Peluso said Tuesday, 12,851 Mainers who exceeded $27,500 in itemized deductions claimed an average of $8,167 in charitable donations – money that could easily dry up if those kindhearted folks can no longer knock it off their taxable income.

Put more simply, Peluso said, her organization “conservatively estimates” that of the $433 million donated annually to Maine’s nonprofits (80 percent of which comes from individuals), $20 million will disappear because of the cap on deductions.

“Our point is that the deduction for charitable giving is unique. It’s the one provision that encourages taxpayers to give away a portion of their income to benefit others,” said Peluso. “This benefits the community as a whole.”

No argument there.

Still, with all due respect to the well-heeled-and-generous, what about Grandma (and Grandpa)? Is anyone going to bat for the 70- and 80-somethings who are trying to stretch their life savings to match their lifespans – without tossing in an out-of-nowhere tax bill?

Richard Erb, president and CEO of the Maine Health Care Association, said Tuesday that accountant Gioia’s alarm was the first he had heard of the looming tax liability for self-paying, skilled-nursing-care patients.

“It’s sort of insult to injury for people who have saved for their long-term-care needs,” noted Erb, whose organization represents Maine’s nursing homes.

Haskell agreed. When it comes to a deduction do-over, she promised, “I would think (Grandma) would be first on the list.”

Note to Grandma: Bring the guy with the sharp pencils.

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