Monday, February 23, 2009
I will be speaking today at the Hamline Health Law institute in St. Paul, Minnesota, on the topic: Diverging Perspectives of "Charitable": Federal Income Tax Versus State Property Tax Exemptions for Hospitals and Homes for the Elderly. Here is the description:
Many states are challenging property tax exemptions for charitable hospitals and elderly housing under the guise of preventing superfluous flows of tax benefits to the rich or middle class. State tax officials resort to "quid pro quo" or similar notions to justify claims that the financially well-off are not entitled to this government largess. Federal law recognizes, though, that "charitable" includes benefits to the poor, in addition to hospital care to all and elderly housing. Using these examples (hospitals and elderly housing), this presentation will explore the impact on state exemption law of two perspectives of "charitable" - the narrow alms giving view of many states versus the broader societal view of federal law.
One of the points I intend to bring out is that the diverging views of what is "charitable" from the federal law perspective and from the state law perspective is at odds with the goal of charity to create contextual diversity. For example, in the Provena case in Illinois, the court states explicitly: "In this respect, the Illinois standard for exemption from property taxes is different from the more diffuse "community benefit" standard for exemption from the federal income tax." Astonishingly, the court interprets the law in Illinois in a way that completely ignores the benefits to society of the many non-charity care activities of a hospital - medical education, crisis nursery services, behavioral health benefits, and Medicaid and Medicare subsidies, for example. True, many of these non-charity care community benefits are not directly linked to notions of "free care" or "gifts" to the poor, but they are valuable in their own right. The real likelihood is that the many states that have this narrow view of charity will, inevitably, adversely affect the ability of nonprofits in general to use creativity, innovation and a myriad of other ideas as a way to advance the marketplace and make society all the better.