EDITORIAL

Bad ideas are too taxing for non-profits

Posted

In the midst of a bad economy and huge deficits some hard-pressed states and municipalities are targeting nonprofits for new sources of tax revenue at a time when charities struggle to meet the increased demands for their services.

Among the targeted nonprofits are universities, church groups and private schools that are normally exempt from property taxes and other user fees. However, some states and municipal governments are re-evaluating the exemption in order to generate desperately needed revenue to balance their budgets. Such a drastic move serves as a financial burden upon many charities and inevitably forces them to reduce their services to pay the bills.

In Hawaii, the legislature is considering a bill that would assess a 1 percent excise tax on charities which would reportedly raise up to $750 million for state coffers. Meanwhile, the City of Minneapolis hopes to raise $155,000 by collecting the same fees it charges businesses and residents for street lighting. Over in Indiana, many cities and towns are looking at user fees for police and fire services. The City of Pittsburgh recently debated whether to charge a 1 percent tax on college tuition to defray the cost of city services. Last year the Rhode Island General Assembly considered a measure that would assess a fee upon students studying at area colleges and universities.

However, the reality is that it also burdens non-profits, who are hard-pressed financially due to the loss of investment funds and, for many groups, dwindling contributions. The tax-exempt status of charities including churches, hospitals and universities is recognition of the important contributions they make and many services they provide, often as a supplement to public agencies. The exemptions relieve the non-profit groups of an expense that drains funds away from needed programs that serve those in need. Such taxes also would demand additional fundraising to support the heavy financial burden inflicted upon non-profits. This policy is short-sighted and fails to adequately consider the value as well as the savings that non-profits provide cities and states. Needed services now provided by many non-profits that governments now rely upon would clearly have to be reduced. Such reduction in critical services only cause harm to the community and a further financial burden to state and local governments.

This new trend should strike fear into those who work and support the many non-profits in our nation. In a time of economic decline when many more are in need of the help that governments cannot afford to provide, non-profits would be unable to respond due to new financial burdens. We urge government and political leaders across the nation - but especially here in Rhode Island- to avoid such short-sighted and simple solutions to the complex financial situation facing our nation and state. Taxing non-profits is not good public policy and should be rejected. It is too taxing on charities and fails to serve the common good of the United States and the State of Rhode Island.