OUR OPINION: City Should Tax Nonprofits

Filed under: Opinion,Subject Categories |

Before the City figures out its new property-tax rate, it needs to tax all the property it’s supposed to tax. And that includes property owned by nonprofits.

Philadelphia is lucky to have a strong and growing base in cutting-edge education and health care. It’s one of the reasons the city isn’t like Detroit today. But these top growth industries tend to be nonprofit enterprises. And that causes an imbalance in our body politic. A hospital needs streets and sewers, teachers and cops just like a cookie factory does. But the factory pays taxes to support these public services; nonprofits don’t.

For years, Payments In Lieu Of Taxes (PILOTs) were worked out by some large nonprofit institutions in voluntary agreements with the City, to compensate for these services, at least in part. But PILOTs have dwindled in recent years, even as the City’s budget crisis blew up. We can’t go on like this.

Fortunately, the Pennsylvania Supreme Court agrees. In a landmark decision this April, it ruled a strict test must be applied to nonprofits’ tax-exempt claims. Any activity or property that does not “relieve the government of some of its burden” is subject to local taxation, it ruled.

More than 10% of Philadelphia’s land is owned by nonprofits – one of the highest rates in the nation. The property-tax burden they are exempted from amounts to $528 million. (The School District budget hole we have been scrambling to fill throughout this year is just $90 million.)

Philadelphia Area Jobs With Justice, organized labor’s lobby for social change, is pressing for immediate action. “When a university like Penn buys a hotel and runs it for profit, or a hospital lets land lie vacant and undeveloped – then, Mayor Nutter is legally obligated to collect property taxes,” its Executive Director Gwen Snyder argues.

No one wants to kill the goose that lays the golden eggs. These nonprofits are authentic “job creators”, after all. PILOT agreements are traditionally the way municipalities prefer to approach this problem. But it is an approach the Nutter Administration should be aggressive about, and in short order. That’s because the tax structure must be comprehensively redrawn during this year. A tax structure without proper PILOTs in place won’t work. It will unfairly dump costs on other property-owners large and small, and that, in the long run, will destroy jobs too.

The Philadelphia Law Dept. and the Office of Director of Finance face many other challenges in these lean times. But this one is worth allocating extra resources to. When budgets are skimpy, an enterprise, whether public or private, must tighten its belt; but it may need to spend extra on its rainmakers. This task is worth the investment. And if it provides jobs to a few more lawyers and accountants … we are glad to see everyone find useful work.

Join over 3.000 visitors who are receiving our newsletter and learn how to optimize your blog for search engines, find free traffic, and monetize your website.
We hate spam. Your email address will not be sold or shared with anyone else.
www.pdf24.org    Send article as PDF   

Leave a Reply

Your email address will not be published. Required fields are marked *