A recent budget plan by Republican Gov. Paul LePage calling for an overhaul of individual, corporate and sales taxes also would make Maine the first state in the nation to require colleges, hospitals and other large charities to go on the property-tax rolls in their municipalities.
I think this is a good idea. What is happening is that these New Commanding Heights enterprises are taking over the nation’s largest cities. That reflects in part the tax distortion.
If you have never encountered my skeptical take on non-profits, you should read this. Even if you are already familiar with my views, it’s an essay worth re-reading.
Tax ’em.
My favorite is Central Health in Austin. As best I can tell its a state sponsored nonprofit Community Care Collaborative (yeah, whatever that means), with a board that meets behind closed doors, and has been given the power to manage hundreds of millions of property tax dollars from bond proposals it lobbied for AND after it opens its new campus we paid for it gets to pocket the cash from the older campus that was given to it from the city (or county, I cant remember). Anyway, not only do these people not pay property taxes on the primest of prime real-estate, it raises my property taxes so it can get its hands on even more property it wont pay taxes on. Nice gig if you can get it.
http://www.statesman.com/news/news/local/central-health-says-its-nonprofit-managing-public-/nTnpt/
While we’re at it, let’s stop subsidizing upper-class amenities like opera houses and “non-profit” golf courses by allowing their patrons to deduct “donations” (really ownership and usage fees) from their income taxes.
Just for example, the Webhannet Golf Club/Course of Kennebunk Beach/ Kennebunkport, Maine, boasts how it willaccept donations that are tax exempt to the donor (emphasis added). (If you read that page you will see some window-dressing about the Webhannet Charitable Foundation giving some money to Toys for Tots and so-forth. Don’t be fooled. See how they first support “golf tournaments and other fund-raisers”? Then they donate part of their “net” to downstream charities? The “gross” is spent on golf-course operations! The whole point is for golfers to pay their ownership costs, greens fees, and tournament-entry fees with untaxed dollars by laundering the money through the WCF.)
All donations to all organizations should be made with after-tax dollars. Yes, even to churches; it is absurd to permit people who like to listen to sermons and religious music to purchase those amenities with untaxed dollars while forcing people who prefer stand-up comedy and jazz to pay for their entertainments with after-tax dollars.
Omitting religious ones? Or just those charging for services?
I would have thought libertarians would hesitate at anything that puts more money and power in the hands of government. Instead of spreading taxes to nonprofits, why not spread exemptions to others?
By the way, many nonprofits make in lieu contributions to local authorities to compensate for services ordinarily compensated for through taxes.
Tax nonprofits or don’t. I say tax them all. Or better yet, drop the corporate income tax as part of a move to taxing everything as ordinary income and stop worrying about nonprofit distinctions altogether.
Choosing arbitrary levels on arbitrary measures of nonprofit size is poor tax policy. It will be easily gamed by large nonprofits, adding administrative inefficiency for relatively little revenue. We struggle with this enough already with profitable going concerns.
Can you please explain more about this sentence from your AEI article:
“For-profit firms ultimately are accountable to customers, while nonprofit enterprises are only accountable to donors.”
I get the accountability issues that donors add. But isn’t there enough competition for students and patients to make nonprofits accountable to customers?
Thanks
If you are the head of a non-profit hospital or university, you only have to please your board. If the students or patients are not satisfied, that is not going to cost your job unless they can get through to the board.
Thanks, I get the governance issues and how they lead to inefficiencies. What I don’t quite understand is why the inefficiencies don’t get competed away. Customers, not donors, provide the majority of operating revenue of nonprofits like universities or hospitals. Do the ineffeciencies persist because the hospital and college markets are dominated by nonprofits and don’t have enough competition from for profit firms?
Education and health care are the leading major sectors of the economy in terms of growth in demand. The supply is restricted by credentials cartels. Given those two factors, it is really hard to fail.