Non Profit Hospitals and Colleges May Start Getting TaxedTax Professionals' Resource
January 15, 2014 — 1,762 views
Though NPOs have been able to avoid taxes until now, as per government benefit incentivizing people to start more, a new bill aims at putting non-profit colleges and hospitals under the tax bracket. The bill was released on Tuesday, and aims at taxing such NPOs. It is likely that this is temporary because of the current financial condition of the state, but it brings in a number of questions and issues.
The government has already reduced the provisions it had of such organizations in the name of the huge deficit and external debt the country owes. In such a situation though, it is difficult for the non-profits themselves, because most make just about enough to sustain their causes. Without provisions or support by the government, citizens are already in a situation where they must provide for themselves. Now with the added taxes, it may even become more difficult for NPOs to provide as much aid as they otherwise could.
Peoples’ Reaction and Aim of the Bill
While the bill seems unfair, it is in fact only those NPOs that receive more than $2 million a year that will come under the tax bracket according to the bill. The bill aims at making the taxation method fair to all tax-payers. While smaller organizations are still tax exempt, there is no need to exempt all 501 (c) organizations from taxation.
Additionally, hospitals make about 10 or 15 percent of the total economy of the state, which means that they should have no issues in paying the taxes. Since they can afford it, it is a good source of income for the government to work on other aspects in the economy that are being overlooked due to the shortage of resources after the economic slump.
Why Hospitals? – The Republicans’ Stand-Point
Hospitals are especially targeted because of the major money that they make, regardless of what category of company they fall under. Though they count as 501 (c)’s, they still rake in huge amounts in income. The argument of Republican representatives standing for the bill is that CEOs of such hospitals make among the top in the society in terms of compensation. Most other businesses are unable to match the amount of money made at such levels. If the money output of the organization is so good, then it makes sense to ask them to pay their share towards the government.