Make It Harder, Not Easier, to Get Property Tax Exemptions

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Rep. Mike Hanna nails it. The local property tax exemption for charitable organizations is already way too loose, and should become tighter.

Property-tax exemptions should be distributed about as easily as manhole covers are tossed about. If not, more of the tax burden falls on homeowners, who already are shouldering an unfair load of an unfair tax.

In some communities, nonprofits consume two-thirds of properties, and their tax-exempt status makes it impossible for local governments to levy fair taxes to pay for police and fire protection, schools and infrastructure.

Any proposal to tinker with our constitution should be viewed warily. However, the public-charities amendment is advancing without even a single public hearing.

Both the process and the policy are suspect. The amendment, I believe, would uphold an unfair system where large health-care organizations with multimillions of dollars in revenue are judged by the same standards as the local boys’ and girls’ club.

Thinking about the rationale for the exemption, the idea is that charitable services deserve exemption from taxes because they are providing public services at least equal to, or possibly better than what the government would otherwise spend that money on (police, public education, etc.)

We do want to encourage people to spend more on these services and their programmatic activities with the tax exemption. What we don’t want to do is create a perverse incentive for charitable organizations to gobble up a bunch of land. That does not make any sense.

Non-profits really should have to keep paying the portion of the property tax levied on land, and receive an exemption for operations. But we should also be tightening up the code so that giant hospital corporations like UPMC that are only technically organized as charities don’t get the tax-exempt classification.

 

This entry was posted in Budget, Economic Development, Issues.

3 Responses to Make It Harder, Not Easier, to Get Property Tax Exemptions

  1. Karel Minor says:

    The problem with that simple an assessment of the cost/benefit ratio is it underestimates other benefits to the community. Non-profits are not merely non-profit “businesses”. Non-profits as a rule have a higher number of employees than for-profits, at more level. For cities with wage taxes, this added payroll tax can offset the property tax revenue lost. For example, my non-profit has a payroll of about $1 million and a 1% wage tax, or $10,000. We don’t pay $3,000 in property tax. If we sold to a homeowner, there would be a net loss of $7,000. If we sold to a typical business within the same market we serve, the payroll would likely be less than half, or a wage and property tax combined of $8,000, a $2,000 loss. That does not even address the collateral revenue of major hospitals, colleges, etc, nor the fact that non-profit pay higher wages and give better benefits for low level staff that the average mall or wawa entry level. This is pennywise, pound foolish.

  2. Julieann Wozniak says:

    I deserve a property tax exemption. In forty years I’ve never been late. Unfortunately, after my mom died, I had a hard time digging myself out from under her medical debt, and if I don’t come up with 2013’s county tax by the end of December, I get to experience homelessness when I lose the home I’ve lived in since 1970. In a rural area with few housing options. I don’t have the political connections needed to acquire the required exemption, like local landowner Dave Kovach, who owed $128,000 and never paid a dime and never lost his property.