Tuesday, April 23, 2019

NPQ: "The True Story of Nonprofits and Taxes"

There is a good read in the spring edition of the Nonprofit Quarterly, authored by Jon Pratt, Executive Director of the Minnesota Council of Nonprofits. Here is an excerpt followed by two informative charts.   

In other words, even though they are sometimes considered to be an essentially “tax-free” sector of the economy, nonprofits clearly have deep involvement on both sides of the ledger: as a tax expenditure, in the sense of forgone revenue, and as taxpayers and tax collectors, making substantial contributions to government revenues through tax collection from nonprofit employees and activities. This side of the ledger is not often examined, so this rough estimate is offered as a clarification that nonprofits are by no means tax negative (or even tax neutral).  The two charts that follow capture nonprofit tax activity in 2015 across a vast array of U.S. jurisdictions—federal, state, and local—in a variety of tax transactions. The IRS reported that charities held over $3.8 trillion in assets and received $2.9 trillion in revenue during that tax year.These projections are my initial effort to quantify (in a necessarily gross estimate) the national value of charitable nonprofit benefits and obligations across the various taxing systems.

Taxexemptvaluechart

 

 

Taxexempttaxchart

It's a short but interesting read.  

 

Darryll K. Jones

https://lawprofessors.typepad.com/nonprofit/2019/04/npq-the-true-story-of-nonprofits-and-taxes.html

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Comments

This analysis is totally wrong. The employees would not disappear if their employer were not a non-profit. They would work somewhere else.

Not only that but the activities carried on by the biggest non-profits which are hospitals are very profitable and would be carried on by taxable entities.

Yes, some social services might disappear and those employees would have to be retrained in something else, But, they would still need to work.

Posted by: Walter Sobchak | Apr 24, 2019 12:52:29 PM

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