Thursday, May 12, 2011
Taxes Cities look to nonprofits for help
Posted by Max Brantley on Thu, May 12, 2011 at 6:57 AM
I haven't seen signs of this in Arkansas yet, but it's worth thinking about.
The New York Times reports on efforts of cash-strapped cities to extract payments in lieu of taxes from exempt non-profits. This makes perfect sense, as does a whole re-examination of favorable treatment given many non-profits. They, too, exert a demand on public infrastructure financed by taxes. Seeking contributions seems reasonable.
There's a crazy quilt of laws affecting nonprofits in Arkansas. They are not automatically exempt from the property tax, for example. A series of tests are applied. Some get favorable treatment on sales taxes thanks to special legislation, some do not. Those with the most clout, not surprisingly, generally enjoy the best treatment.
Example of what others are doing:
While Boston has long collected voluntary payments from its nonprofit institutions, it has done so haphazardly, with some universities paying millions of dollars, while their peers paid little or nothing. So Boston’s mayor, Thomas M. Menino, convened a task force that studied the issue for much of last year and decided to try to establish guidelines for the voluntary payments. This year the city is trying to collect voluntary payments from all nonprofits with property worth more than $15 million. The payments will eventually rise to a quarter of what the nonprofits would pay in property taxes if they were taxable, with the provision that they can get credit for up to half of the money they owe by providing quantifiable “community benefits” that directly help city residents. By the time the system is phased in, the city hopes its annual payments from nonprofits will rise to $48 million from $15 million.
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