Taxing Non-Profit

The red ink on the balance sheets of many state and local governments seems to be causing them to re-think the tax-exempt status of many non-profit organizations.

There seems to be every thing from legal/administrative challenges to organizations non-profit status to requests to non-profit organizations for tax “donations”.  Some localities are considering totally revoking non-profit exemptions, and others are simply creating hidden fees for services that are not exempt-able.

Clearly we as American’s need to re-think the non-profit tax exempt status totally.

Personally I think tax exemption for an organization should work more like “homestead exemption” — that they can be allocated a given amount of tax credit by each of their “supporters”.

Consider a system where every American is allocated a non-profit tax exemption that they can transfer to any organization (or split between organizations) that they desire; or choose not to… this gives each non-profit the ability to have a tax exemption proportional to their supporters.

What this prevents is large non-profit organizations (including faith based organization) from operating for-profit businesses or holding large tracts of real estate on which no tax is paid… but for modest non-profit organizations there would likely be minimal tax impact…

I personally believe that organizations that help society should be encouraged and supported – but organizations that simply try and evade taxes should not force the general public to support them.

Take a hard look at non-profits; ask how much of every dollar provided to them actually is delivered to the cause it is to help; ask how many employees are supported by the organization and whether their salaries are comparable those employed by for profit; and ask the same of the administrators of non-profit and who well they are compensated…

Originally posted 2010-05-27 02:00:45.