April 27, 2009
N. Carolina Legislature Debates Limiting Sales Tax Exemption for Some Charities
According to this story in the Winston-Salem Journal, some state senators in North Carolina have proposed limiting the current sales tax exemption for nonprofits by capping the exemption at $5 million per year. The proposal would hit some large nonprofit hospitals and universities, and is (naturally) causing some nonprofit hospital executives to hyperventilate over potential loss of their exempt status for other (e.g., property and income tax) purposes. They should probably be more worried about health care reform and potential universal coverage; if that happens, charity care, which is the core of the argument in favor of exemption for nonprofit hospitals, will certainly decline if not cease to exist (there may still be some charity cases - for example, illegal aliens not covered by any new government program, and there may still be some argument about whether reimbursements, particularly from government programs such as an expansion of Medicaid, fully cover costs). I can't wait to see how the nonprofit hospital industry makes its arguments for continued tax exemption in a universal-coverage world . . .
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