Nationwide, people involved with museums, archives, nature preserves, homeless shelters, battered women shelters and similar endeavors are nervous.
Currently, all states exempt nonprofit organizations from property tax, either through laws or through the state constitution; but that could change in a hurry.
Maine Gov. Paul LePage’s proposed budget would lower the income tax, increase the sales tax and require cities to levy a property tax on nonprofits with property in excess of $500,000.
LePage pointed out that tax-exempt nonprofits are the beneficiaries of public services such as police officers, fire fighters and snow removal. He may have been a tad too blunt when he referred to nonprofits as “takers, not givers.” Luckily someone shut off his microphone before he could add “You didn’t build that” and launch into a litany of “Yo momma” jokes.
In the case of McCulloch v. Maryland (1819), Chief Justice John Marshall declared, “The power to tax involves the power to destroy.” LePage’s plans cut some slack here and there, but once budget makers get a taste of new revenues, things can only get worse. LePage’s plans for destroying nonprofits just a little bit are apparently patterned after that well-known Maine nonprofit The Little Bit Pregnant Crisis Center.
Yes, in some cities and states nonprofits do VOLUNTARILY make payments in lieu of taxes; but I cringe to see them guilted into such actions. (“So, would it kill you to call up the commissioner of revenue every now and then, Mr.Big Shot?”)
Nonprofits probably need to do a better job of promoting the intangible “quality of life” benefits of their services. One official made the rather unconvincing argument that taxation of nonprofits could cause cities to lose their “vibrancy.” (“Oh, man! Just when I got my groove back and my mojo working, I lose my vibrancy! I’m going to have to start tying the darned thing on. Y’know, right after Marie Antoinette lost her vibrancy, she lost her head.”)
Taxation of nonprofits could have serious unintended consequences, including cutbacks (shorter hours, higher fees, fewer meals/whatever provided) or nonprofits abandoning some states entirely. To be sure, some nonprofits have a habit of automatic whining. (“Postage went up; we’ll have to kick clients out in the street. Utilities went up; we’ll have to kick clients out in the street. Yak milk went up; we’ll have to write off new Guccis for the assistant director to use in kicking clients out in the street...”)
Yes, tax-exempt thrift shops and charity hospitals have an advantage over for-profit second-hand stores and for-profit hospitals, but let’s not get carried away with denunciations of tax exemptions. (“Earn your merit badges some other way! The Boy Scouts are messing with the stock price of our Uber spinoff that helps little old ladies across the street!”)
I was a Cub Scout. My father was a Kiwanis Club member. The Rotary Club gave me my only scholarship. My son benefitted from Red Cross swimming lessons. So I have an interest in seeing that nonprofits get treated fairly and that we don’t jump headfirst into uncharted waters.
For instance, supporters of nonprofits point out that municipalities and nonprofits have always enjoyed a good relationship and that tax changes could create an ugly adversarial situation. Sadly, some money-hungry municipal officials are not so upset over the prospects of conflict. (“Wow! Mixed martial arts cage fighting! Councilmen versus soup kitchen workers! KA-CHING!”)
Danny welcomes email responses at tyreetyrades@aol.com and visits to his Facebook fan page “Tyree’s Tyrades”