Thursday, January 24, 2008

Should Non-Profits Pay Property Taxes? (Update)

A few days ago I posted my musings on the issue of imposing property taxes on property owned by non-profit organizations. Reader shap expressed some concern that not all non-profits were "truly positive contributors to society" and suggested that because a substantial portion of property taxes go to pay for eduction, it was an assumption that society could not make. While I agree with some of the concerns that shap addresses, I wonder if it is "fair" (loaded word, but what are you going to do?) to tax all non-profits because of some "bad apples" or because some non-profits have a more limited constituency. I suspect far more non-profits do, in fact, offer a positive contribution to society as a whole and it seems wrong to make them pay taxes solely because some non-profits do not.

I also recognize the concern of having some taxpayers, in essence, subsidize religious non-profits that they may either not patronize or categorically disagree with. But what do we do about secular (or semi-secular) non-profit institutions? For example, should the YMCA pay property taxes? What about an art museum? The Humane Society's kennel and bark park? A Goodwill store? A community soup kitchen? (I'm assuming that these institutions don't pay property taxes, but I don't know.)

As the issue moves further away from religious institutions, I think that it becomes even more difficult. Yet I am concerned about using any sort of test as to "how good" the non-profit is or what and how much "community service" the non-profit provides in order to determine whether the non-profit should remain exempt from property taxes. Then again, those non-profits that truly do not benefit society as a whole should probably not be subsidized by that society. But what is the measure of whether the non-profit is beneficial to society as a whole or to just an insular, limited group? How many people must be "touched" by the non-profit for it to be socially beneficial and thus exempt from property taxes?

This musing out loud is kinda fun...

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