Nonprofit Tax Sparks Outrage

Nonprofit Tax Sparks Outrage

Maine Governor Paul LePage has released a plan that would eliminate the property tax exemption for nonprofits and allow local municipalities to tax these nonprofits. Not surprisingly, that has hospitals, private colleges and other nonprofit organizations slightly upset. A group representing these nonprofit entities has gone to the state capital arguing that the governor’s proposal would “devastate” their budgets.

According to Jeff Austin, a lobbyist for the Maine Hospital Association, the plan would cost hospitals between ten and twenty million dollars next year. Ominously, Austin threatened that these costs would be passed on to consumers. Maine is not the only state having this conversation, and you can bet millions are watching these events unfold with distinct interest.

This comes at a time when the American public’s debate regarding the “fairness” of certain nonprofit tax protections is heating up. Many consumers are aggravated that some hospital and university systems bring in so much money yet enjoy sweeping tax protections.

Many see these massive nonprofit institutions as only masquerading as “nonprofits” while bringing in enormous revenues and paying out huge salaries to CEOs and other top executives. Whether or not there is any truth to those perceptions, that perspective is gaining more and more traction in the marketplace of ideas. Some have been calling for an across-the-board revocation of protected property tax status for nonprofits for years. Some pundits with huge followings have suggested we could “erase the national debt by taxing the Catholic Church.”

Hyperbole aside, the idea of revoking special tax status for nonprofits is gaining traction. The Maine case may die before LePage takes it anywhere, but it is likely just the first shot in a war that has been coming for some time…a war in which public relations will play a key role in the eventual outcome.

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