October 27, 2011
Are Charities Subsidizing Tax Breaks for Private Industry?
This week my Nonprofit Law class discussed the increasing trend of financially pinched states (and their local governments) squeezing money out of charitable organizations either through narrow interpretations and applications of their property tax statutes or by demanding PILOTs and SILOTs. It is therefore timely that a recent Chronicle of Philanthropy blog post quoted two national nonprofit leaders as claiming that states and local governments are "overreaching." They ask whether it is wise and just for states and localities to be imposing property taxes on charities at the same time that many are tripping over one another to offer tax breaks to private enterprises to lure them into their jurisdictions. I agree with the nonprofit leaders, especially when one considers that the tax break/incentive programs targeted at private firms rarely work as matter of long-term economic development. States and local governments lure industries to their regions, and then, a few years later when another state (or foreign country) offers a better deal, the industry leaves town taking its jobs with it. As a long-term economic development strategy, the states and local governments would be much wiser to invest in education and infrastructure. That's what attracts private employers who sink roots.
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