[HN Gopher] Reining in America's $3.3T tax-exempt economy
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Reining in America's $3.3T tax-exempt economy
Author : telotortium
Score : 166 points
Date : 2024-06-20 16:03 UTC (6 hours ago)
(HTM) web link (taxfoundation.org)
(TXT) w3m dump (taxfoundation.org)
| jdonaldson wrote:
| Most of the money there is in hospitals. I don't think it does
| the economy any good to tax those. Love to hear arguments the
| other way.
| dmckinno wrote:
| Healthcare is a slippery slope. Don't tax hospitals, but tax
| pharmaceutical companies? Don't tax pharmaceutical companies,
| but tax the income of doctors?
|
| I think the point of the article is that it's really hard to
| make these judgments and doing way with the whole system
| entirely makes the most sense, which seems reasonable to me.
| willcipriano wrote:
| "Best I can do is tax you like you have socialized
| medicine[0], then force you to pay 2 - 4 fold what those
| other counties private systems cost to actually get care for
| most of your life." - Every politician in my entire life time
|
| [0]https://data.oecd.org/healthres/health-spending.htm
| ceejayoz wrote:
| Quite a few politicians suggest we take one of the various
| approaches the rest of the OECD countries do, as they're
| clearly more cost-efficient... but _that_ gets derided as
| socialism.
| willcipriano wrote:
| Then they vote for another war instead.
|
| They also never make the point that we are already paying
| for it. They want to tax me more, when if they were as
| efficient as the NHS I'd have two healthcare systems with
| money left over.
|
| Medicare for all will never see the floor until everyone
| currently over 60 is gone, at a minimum. They are all in
| on it.
| ceejayoz wrote:
| The US can clearly afford _both_ , as your chart
| demonstrates. It shows we pay more in tax than the other
| OECD countries pay _in total, including taxes_ for
| healthcare.
|
| We've picked the least efficient worst-of-both-worlds
| scenario out of a fear of anything that sounds like
| socialism ("public option", "Medicare for All", etc.).
| willcipriano wrote:
| Its corruption. Explain it in the terms I have on the
| national debate stage, everyone is on board. NHS style
| healthcare AND lower taxes. You'd win every election, but
| you'll never see that stage.
| whoitwas wrote:
| No one would win anything. Money wins elections. If you
| had this platform and money, you find an early grave.
| antisthenes wrote:
| > The US can clearly afford both, as your chart
| demonstrates.
|
| The chart doesn't demonstrate anything of the sort. By
| definition, sovereign governments can afford literally
| anything, since they can print the currency within the
| country. It will just cause inflation.
|
| That statement is complete and utter reductionist
| nonsense.
| ceejayoz wrote:
| We are _currently_ paying for both.
|
| The fact that our current setup costs 2-3x any other OECD
| nation indicates reform to be more like their systems is
| likely to _reduce_ costs, not increase them.
| pessimizer wrote:
| The US government is currently paying as much per capita
| for healthcare as socialized systems, then individuals
| pay _again._ If we can afford what we 're doing now, it's
| obvious that we could afford a socialized system. It
| costs less.
|
| The reason we don't have one is because Democratic
| politicians, funded by healthcare and drugs, are so
| willing to lie about the math for money, and the media,
| funded by ads for healthcare and drugs, are so willing to
| help them.
| csdreamer7 wrote:
| > Don't tax hospitals, but tax pharmaceutical companies?
|
| Hospitals, to maintain their nonprofit status, have to
| provide charitable contributions. One way is when patients
| apply for payment reduction or discharge because they can not
| afford to pay. Patients need to apply for this so they have
| documentation to give the IRS.
|
| > Don't tax pharmaceutical companies, but tax the income of
| doctors?
|
| How often do you ask a doctor to work for free? They still
| get paid by the hospital.
|
| Yes, pharmaceutical companies, which as far as I know are
| private, also have something like this. This is preventing
| media coverage and Congress imposing max cap on prices on
| public assistance programs (prices private insurance will use
| for leverage) so they can keep charging what they want.
|
| > I think the point of the article is that it's really hard
| to make these judgments and doing way with the whole system
| entirely makes the most sense, which seems reasonable to me.
|
| The point of this article is to attack the nonprofit
| competitors to their due paying members. They gloss over many
| details and as I posted elsewhere; they even defensive of the
| tax loopholes of their due paying members.
| FireBeyond wrote:
| > How often do you ask a doctor to work for free? They
| still get paid by the hospital.
|
| Oftentimes, physicians are not paid by the hospital at all.
| They will form consulting groups and work for the
| consulting group which will have a contract with the
| hospital, or they'll do something C2C.
| bagels wrote:
| I think it's hard for people to reconcile $1000 10 minute
| doctor visits, and $10,000 IVs with tax free status.
| steego wrote:
| Or you could look at Kaiser Permanente, which is the exact
| opposite of this and the biggest nonprofit cited in this
| paper.
|
| Unless you go to 3rd party provider for a non-emergency, you
| will never get hit with this type of nonsense. Everything is
| reasonably priced.
|
| It's a nonprofit organization that handles the financing and
| providing healthcare services which gives them an incentive
| to manage costs.
|
| The ACA marketplace gives them an incentive to provide good
| service because you can always sign up for different
| insurance at the end of the year if you don't like the care
| they provide.
|
| Personally, I suspect this study was sponsored by the big
| health insurance companies who want to get in the same game.
| supertrope wrote:
| While the exact line items are made up the money to pay
| nurses ultimately has to come from somewhere.
| softfalcon wrote:
| It's called universal government provided healthcare. We have
| it in Canada. Gets rid of that nasty, unnecessary, "for profit"
| medical sector.
|
| Though, I think that may actually be as-large or a larger
| problem for America than non-profit taxation/exemption
| policies.
|
| You have to admit, you could clamp down on the other crap
| easier if healthcare being a "non-profit" wasn't such a big
| deal due it just being managed by the government.
| EasyMark wrote:
| I think mostly what we need is transparency for nonprofits,
| list of all salaries, expenses, capital expenditures, bonuses,
| etc before one can really say what makes sense. Including for
| "customers" (patients). If you know how much it takes to run a
| nonprofit then people will begin to understand if they are
| price gouging or if there's some huge expense that the general
| public is unaware of. We need the light of day put on these
| ventures so they can't hide info AND keep their nonprofit
| status. For example, I wish we were much harsher on religious
| non profits that get mixed up in politics and support
| candidates and parties, they should lose their tax free status
| immediately.
| guntars wrote:
| > The majority of tax-exempt organizations today are business-
| like in form and function, including credit unions, hospitals,
| utilities, insurance companies, universities, professional
| athletic associations, golf clubs, and consulting firms, to name
| a few.
|
| Missing a big one there. I know that taxing religious
| organizations would NEVER fly in the US, but.. can you imagine?
| babypuncher wrote:
| I'm OK letting religious institutions keep their tax exemption,
| but we should make them adhere to the same standards as
| 501(c)(3) organizations (non-profits). A whole lot of churches
| would either start paying taxes, or expose themselves as frauds
| with those financial transparency requirements.
| r00fus wrote:
| This exactly - the existing hypocrisy leads to religious
| organizations essentially being tax-exempt political
| organizations.
| nickpeterson wrote:
| I think you're right, but it's probably better to try and
| remove their exemption and then settle on this. They'll
| scream either way because unethical hucksters will do
| anything to keep fleecing people.
| edmundsauto wrote:
| It might make them feel even more empowered to inject their
| religious beliefs into politics. Nowadays there is a paper
| thin pretend curtain around that, I believe, due in part to
| tax exemption.
| PopAlongKid wrote:
| There is a loophole where a religious organization doesn't
| even have to file any paperwork with the IRS to establish its
| tax exempt status. While $5,000 doesn't sound like a lot,
| that limit was probably set many years or decades ago and
| never adjusted for inflation (so the original intention could
| well have been a much higher level of revenue).
|
| _" Tax Exempt Organization Search (Pub. 78 data) is based on
| information received in applications seeking recognition of
| exemption under Internal Revenue Code section 501(c)(3).
| Churches, their integrated auxiliaries, conventions or
| associations of churches, and public charities whose annual
| gross receipts are normally not more than $5,000 may be
| treated as tax-exempt without filing an application. Also,
| many churches are included in group exemptions (see below).
| Thus, they may not be listed in Tax Exempt Organization
| Search (Pub. 78 data)."_
|
| https://www.irs.gov/charities-non-
| profits/contributors/other...
| Alupis wrote:
| This doesn't work in practice, because of freedom of
| religion, freedom of assembly, and separation of church and
| state, ie. constitutionally guaranteed rights.
|
| Taxing churches would then be a way for government to
| suppress and eliminate religion/religious organizations they
| do not like. Start taxing today with a "reasonable" tax, and
| tomorrow you can raise tax obligations until operation is
| unsustainable. A la "subsidize things you want more of, tax
| things you want less of".
|
| Despite what non-religious and/or anti-religious people may
| want, this is untenable and almost certainly
| unconstitutional.
|
| As an aside - the federal government has plenty of money. We
| don't need to go looking in the seat cushions for pocket
| change. Instead of "Reining in America's $3.3T Tax-Exempt
| Economy", we should be "Reining in America's Overindulgent
| Lifestyle and Runaway Spending Spree".
| toast0 wrote:
| > Taxing churches would then be a way for government to
| suppress and eliminate religion/religious organizations
| they do not like.
|
| I don't know what the IRS standards are for recognizing
| religions, but taxing unrecognized religions and not taxing
| recognized religions seems like a bigger potential for
| suppression of undesired religions than taxing all of them.
| That said, I don't think I've heard of a case where
| IRS/government refused to acknowledge a claimed religious
| organization?
|
| Of course, you can't have free exercise of religion if it's
| taxed. I do think it'd be nice to have public tax returns
| or similar, but I guess that's really for the membership to
| demand more than the government.
| sneak wrote:
| > _That said, I don 't think I've heard of a case where
| IRS/government refused to acknowledge a claimed religious
| organization?_
|
| Perhaps illustrating your point, but worth noting anyhow:
| the dangerous for-profit cult of Scientology actually had
| to infiltrate the IRS with their own people to get their
| tax exempt status.
|
| https://en.wikipedia.org/wiki/Operation_Snow_White
| guntars wrote:
| By that logic, does having philosophical or political
| discussions at a local coffee shop once a week qualify it
| for a tax exempt status?
| tzs wrote:
| Churches can in fact by taxed.
|
| For example Texas once had a sales tax exemption for
| periodicals sold by churches that consisted solely of
| material to promulgate their faith, and the Supreme Court
| in Texas Monthly v. Bullock, 489 US 1 (1989) [1] said that
| such an exemption violated the establishment clause.
|
| In Swaggart Ministries v. Cal. Bd. of Equalization, 493 US
| 378 (1990) [2] Swaggart contended that California's
| subjecting them to sales/use tax was unconstitutional. The
| Court said it wasn't.
|
| [1] https://caselaw.findlaw.com/court/us-supreme-
| court/489/1.htm...
|
| [2] https://caselaw.findlaw.com/court/us-supreme-
| court/493/378.h...
| Alupis wrote:
| Your post seems to be misleading. Both rulings focus on
| selling goods to non-members, which seems rightfully
| taxable.
|
| This discussion is about taxing churches/religious
| organizations in general on all revenue/income (ie.
| tithe, donations, membership fees, etc). That would very
| likely be unconstitutional, as that would limit the
| organization's ability to assemble and practice religion.
| sircastor wrote:
| > we should be "Reining in America's Overindulgent
| Lifestyle and Runaway Spending Spree".
|
| If you're interested in knowing where your federal tax
| dollars are going, put your numbers in and take a look.
| It's possible this is the most productive thing Intuit has
| ever done.
|
| https://us.abalancingact.com/2023-federal-taxpayer-receipt
| snapplebobapple wrote:
| I don't think this holds water, especially when the default
| behaviour is to just treat them like any other business.
| You could make this absolutely dead simple by exempting
| donations from tax but taxing all other forms of income and
| removing all deductions.
| babypuncher wrote:
| My problem is the lack of transparency with how donations
| are handled. Many churches primary source of income is
| donations, which they turn around and spend on private
| jets, lavish clergy salaries, or even for-profit
| endeavors like giant shopping malls.
|
| Because churhces are exempt from all the transparency
| required of normal nonprofits, they can easily mislead
| their congregations about how that donated money is
| spent.
|
| If someone decides to switch churches because they found
| out that most of the money they donated was not actually
| going towards charitable causes, that would be an
| absolute win in my book.
| Alupis wrote:
| > Many churches primary source of income is donations,
| which they turn around and spend on private jets, lavish
| clergy salaries, or even for-profit endeavors like giant
| shopping malls
|
| You're describing maybe a dozen or less mega-churches -
| not the thousands and thousands of typical churches.
| babypuncher wrote:
| Except churches would still be tax-exempt. All they would
| have to do is make their finances public, so that the
| people donating money to them know what that money is going
| towards.
|
| If they don't want their congregations to know how much
| they spent building a giant mall or buying private jets,
| then they can choose to pay taxes instead. If you don't
| think your congregation will care about the private jets,
| then by all means, keep your tax exempt status.
| sneak wrote:
| Religious organizations are not tax exempt.
|
| Congress is authority-exempt from making laws that can apply
| taxes to them in the first place.
|
| It's not like we tax everyone, then exempt religious
| organizations; the "everyone" that is able to be taxed does
| not include establishments of religion in the first place,
| thanks to the wording of 1A.
| vundercind wrote:
| Sure they can. They can't _selectively_ tax only the ones
| they don't like. Which is actually closer to what happens
| now.
| segasaturn wrote:
| The phenomenon of "megachurches" and "televangelists" in
| America fascinate me, you have guys like Pat Robertson driving
| Rolls Royces and flying in private jets, all paid for tax-free,
| in the name of a religion that commands its followers to give
| everything they have to the poor. It's all so perverse.
| hobotime wrote:
| Pat's income from his mega church and gifts in kind are
| taxable.
|
| I'm not saying he's a good person, but he has personal income
| just like the rest of us. The odd clergy exemptions to the
| personal income tax are not that large:
| https://www.irs.gov/taxtopics/tc417
| ceejayoz wrote:
| > he has personal income just like the rest of us
|
| And like the rest of his fellow mega-wealthy, he'll be able
| to fiddle it away in a number of ways.
|
| The flights (and dinners, and cushy hotels, and big
| parties) will be for "church business". The "fair rental
| value" of his home will be immense, and "reasonable
| compensation for the minister's services" will be something
| the IRS is reluctant to fight over.
| pram wrote:
| A lot of the original evangelical megachurches were directly
| influenced and guided by Peter Drucker who was a big
| "scientific management" figure, if that tells you anything.
| He was a direct mentor to Rick Warren who started the
| Saddleback Church, which is like the modern megachurch
| template. Pretty interesting rabbit hole to go down.
| downrightmike wrote:
| Religious orgs do nothing but prey on the weak and break them
| so that they can never be free and have to rely on the church.
| And then there's all the land that they use once a week, and
| that is a complete waste. All that needs to be taxed, they
| shouldn't exist. You want to pray, cool, don't waste resources
| and pay your share.
| throw7 wrote:
| Nah. I can imagine the country without the first amendment and
| it wouldn't be pretty.
|
| The big one they missed were think tanks. That's where the real
| corruption is. Oh and will you look at that... the Tax
| Foundation is a 501(c)(3) think tank based in D.C. Things that
| make you go hmmm.
| rho138 wrote:
| How is this covered by the first amendment? No one is
| stopping anyone from practicing their own belief system.
| sircastor wrote:
| I used to belong to a very large Christian faith, with members
| all over the economic spectrum. One of the major tenants of the
| faith is paying tithing. I think most people adhere to it, but
| I seriously wondered many times if the wealthier among the
| faith would pay their tithing if it didn't result in a
| substantial tax break.
| happyopossum wrote:
| > would pay their tithing if it didn't result in a
| substantial tax break
|
| Do you understand how tax breaks work? If you make 100k, and
| tithe 10% of that you don't get a 10k tax break, you just
| don't pay taxes on that 10k. You're still out the money, and
| best case you could rationalize it as only costing you 8-8.5k
| (depending on your marginal tax rate), but it's not some
| magic sauce that gets 'the wealthier' free money.
| sircastor wrote:
| The concept is this: When you're donating reasonably large
| amounts of money to charity (a church in this case) you can
| deduct that amount from your taxable income while
| simultaneously supporting an organization that you like
| (your church) If that feature goes away, and now you have
| to pay tithing on top of paying taxes at your full income
| tax bracket rather than a reduced bracket, are you still
| willing to pay your tithing?
| 1oooqooq wrote:
| didn't trump change to tax limit donations to 300 now?
| larsiusprime wrote:
| Good question! Let's imagine!
|
| Most of the value of churches is in real estate. I imagine a
| lot of the Mainline protestant denominations (typically the
| most liberal), who have low and declining attendance, would be
| hit the hardest as they own a lot of historic downtown
| properties worth in the tens of millions.
|
| Conservative Protestant, and Catholic churches own a lot of
| real estate too, but they have bigger congregations.
|
| If you have a $10,000,000 property that owes 1.5% property
| taxes a year, that's about $150,000 in taxes every year.
|
| If you have 15 families earning $100,000 a year who each tithe
| (or 30 families earning $50,000 a year), then you break even on
| those taxes (you still have the rest of your church expenses to
| pay, of course).
|
| I'm not aware of the rate of tithing and attendance in
| Conservative Protestant, and Catholic churches, but I'm
| guessing it's higher than in mainline Protestant Churches. I
| imagine non-mainline churches also have a wider portfolio of
| real estate; they probably own their own share of prime real
| estate in downtown city centers, but most of their churches are
| likely dispersed in suburban and rural areas with much lower
| value land.
|
| My hypothesis (confidence: 75% sure, but haven't done all the
| necessary math) is that if you were to push for a full repeal
| of church property tax exemptions, Megachurches, Conservative
| Protestants, and Catholics would be very upset about it, but
| would probably be able to weather the storm, and Mainline
| protestant churches and other minority religious organizations
| with high value urban property and low relative attendance
| would essentially be wiped out overnight.
|
| In short -- if you're a liberal, be careful what you wish for.
| galleywest200 wrote:
| Who says it has to be property taxes? Make them pay taxes on
| advertising or other such activities.
| happyopossum wrote:
| Your entire scenario here is based around a local (state and
| county) tax, and has nothing to do with the federal tax code
| the parent article is concerned with.
| HDThoreaun wrote:
| The church has no profits. Making religion pay property tax
| is the only thing turning them into for profit institutions
| would do.
| brink wrote:
| I'm Christian, and I don't think religious orgs should be tax
| exempt.
|
| It may have worked well until now, but I worry that in the future
| it will allow future administrations to threaten tax-exempt
| status for churches that don't conform their teaching to
| society's preferences in the moment. Churches shouldn't be in it
| for the money anyway. We should just rip that entire band-aid off
| and undo something we never should have done in the first place.
| wang_li wrote:
| What would that even look like? Gift taxes are paid by the
| giver not the recipient. Currently you don't even have to
| report it if it's less than $18,000 per year per recipient. If
| you give less than $13 million in your lifetime you don't have
| to pay any gift taxes anyway.
|
| I have a feeling that most people probably don't give $18,000
| to their churches annually. At a 10% tithe rate, that's
| $180,000. Wel above the median household income.
| bombcar wrote:
| Donations to correctly setup churches (and some but not all
| non-profits) can be tax deductible from income.
| loco5niner wrote:
| For me that's only true if I itemize. With the standard
| deduction being $29,200 for me this year, that's a tall
| hurdle. And at that, the only benefit is any amount over
| the standard deduction.
| Aurornis wrote:
| > More than half (55 percent) of all the income generated by
| 501(c)(3) organizations comes from tax-exempt hospitals and
| health-care plans.
|
| The median operating margins for hospitals is around 0% or some
| times negative. Injecting more costs into the system is only
| going to push prices further upward.
|
| > The majority of tax-exempt organizations today are business-
| like in form and function, including credit unions, hospitals,
| utilities, insurance companies, universities, professional
| athletic associations, golf clubs, and consulting firms, to name
| a few.
|
| I'm completely on board with clamping down on tax exempt status
| for a lot of these other businesses, though. Credit Unions are
| nice, but they're still just banks. Insurance companies are
| obviously businesses. Athletic associations, golf clubs,
| consulting firms -- What is even going on that allowed these to
| be nonprofits?
| pstrateman wrote:
| They don't distribute profits to their members.
|
| The only thing making them pay tax will do is create an
| accounting nuisance where they drive profits and thus taxes to
| zero.
| chrislloyd wrote:
| If they drove profits to zero by distributing it to their
| members, wouldn't that incur income tax?
| addicted wrote:
| And how will they do that? You can't just "drive profits to
| zero by accounting nuisances". Otherwise every for profit
| organization would do that.
|
| (Although, separately, this is what IKEA does but they setup
| an extremely intricate multinational structure to achieve
| this, and this is what Amazon does, but that required heavy
| re-investment which only worked because the markets trusted
| the reinvestment would eventually be profitable and therefore
| invested in AMZN despite it not showing profits).
|
| They'd have to do it by paying salaries or buying products,
| etc all of which are also taxed, and usually at rates higher
| than taxes on profits.
| bombcar wrote:
| The reason for-profit companies don't "drive profits to
| zero" is that the shareholders would eventually notice and
| complain.
|
| There are some technical for-profit companies that
| effectively drive profit to zero and the shareholders don't
| care, because that was the purpose.
| SoftTalker wrote:
| Amazon famously had negative profits for years as they
| spent on building out their infrastructure.
| lotsofpulp wrote:
| Amazon did not consistently lose money. They were
| basically breaking even since the early 2000s and they
| proved they could turn on the profit faucet anytime they
| want once AWS came around. Although, they still heavily
| invest in infrastructure development, hence the continued
| low profit margins.
|
| https://www.stock-analysis-
| on.net/NASDAQ/Company/Amazoncom-I...
|
| See Amazon v Walmart net profit margin 1999 to 2018
| graph.
|
| https://mgmresearch.com/amazon-vs-walmart-revenues-and-
| profi...
| afpx wrote:
| I read things like this though:
|
| "In each year from 2014 to 2018, about half of all large
| corporations had no federal income tax liability."
|
| https://www.gao.gov/assets/gao-23-105384-highlights.pdf
| EasyMark wrote:
| Yes but there are plenty of ways to do that with R&D,
| capital write-offs, "business expenses", reinvestment,
| etc . I don't think there are nearly that many for
| charities and other nonprofits.
| https://www.investopedia.com/financial-edge/0512/how-
| large-c...
| pstrateman wrote:
| You answered your own question, they just spend more money.
|
| How does non profits spending money inefficiently to burn
| revenue help society?
| AlbertCory wrote:
| Wrong. If they're not 501(c)(3) then donations to them are
| not tax-deductible.
| Y_Y wrote:
| > The median operating margins for hospitals is around 0% or
| some times negative. Injecting more costs into the system is
| only going to push prices further upward.
|
| Maybe it's for the best.
| stefan_ wrote:
| I see this sentiment a lot with US internet providers - "but
| they aren't making any money as is, it must be a real tough
| business environment". I think there are limitless ways for bad
| actors to make lots of money in a broken market that doesn't
| mean there must be a unidimensional monopolist giga corp at the
| center of it raking in all the margin.
| sandworm101 wrote:
| >> The median operating margins for hospitals is around 0% or
| some times negative.
|
| Then they should not have to worry about paying income taxes
| regardless of their classification.
| hondo77 wrote:
| So, if their margins are zero (or negative) then there's no
| profit so nothing to tax so no additional costs, right? Or am I
| missing something?
| stiglitz wrote:
| > The median operating margins for hospitals is around 0% or
| some times negative
|
| I found this page that seems to agree-
| https://www.definitivehc.com/resources/healthcare-insights/h...
|
| That shows a negative median operating margin for the last 5
| years. How can an industry carry on losing money like this?
| This must be only part of the story, right?
| ndriscoll wrote:
| The answer is right in the OP:
|
| > More than half (55 percent) of all the income generated by
| 501(c)(3) organizations comes from tax-exempt hospitals and
| health-care plans.
|
| They can carry on losing money because they are often
| charities. Isn't a 0% or less margin what most people would
| naively expect for a charity?
| unyttigfjelltol wrote:
| Hospitals certainly appear to be operated for the benefit
| of physicians and administrators, and their compensation is
| an expense not profit. The relevant statistic is highly
| compensated leaders, not profit.
| ndriscoll wrote:
| True, though they'd still be paying payroll taxes. To me,
| it seems like the thing nonprofits could maybe let you
| "get away with" is building up an endowment that can fund
| sinecures, which could effectively turn it into a sort-of
| super IRA for the ultra-wealthy (i.e. with no required
| distributions for your beneficiaries after you die, you
| could have an effectively everlasting traditional IRA
| that your descendants control and could access through
| fake salaries). This has the side "benefit" of letting
| your descendants save face and pretend to have important
| charity work that they do as opposed to being a layabout
| that lives off great-grandpa's wealth. If you do it
| right, they might even believe it themselves!
| FireBeyond wrote:
| Many hospitals never employ a single physician. Or next
| to zero.
|
| Am a paramedic. All of the ED physicians in the Level 2
| Trauma Center I take most patients to are not employed by
| the hospital, but by a collective called "XYZ Emergency
| Medical Providers". The hospital then (I don't know these
| details) contracts with the collective. I also believe,
| very similar to a union, that if the hospital wishes to
| hire a new provider, they may handle all the
| interviewing, but ask for the collective to hire them.
| EasyMark wrote:
| You'd have to be pretty naive, I'd say a nonprofit still
| needs to save some money to handle the ebb and flow of just
| existing and to have some money tucked away. I'm not sure
| how that works since I've never been part of one, but there
| has to be a way, because it's the only pragmatic approach
| to anything that lasts more than a few months.
| mfer wrote:
| Healthcare systems costs and operations are a mess. Here are
| a few examples, hospital systems setup places that can do
| anything which adds complexity and increases costs. So, they
| are not cost optimized. The more a facility can do the more
| it costs to do any one thing.
|
| Hospitals loose money on many procedures while making some
| money back on others.
|
| There is also costs around staffing. For example, nursing
| schools aren't producing the growing number of nurses needed.
| Supply and demand kicks in.
| asdfsdfas wrote:
| You're still seeing heavy consolidation in the industry which
| is a clue something fishy is going on-- why would a hospital
| system _choose to grow_ for instance? where would the $$ come
| from to buy other ones?
|
| The answer is hospitals target negative operating margins to
| meet various rules-- even though their "surplus" (ie profit)
| isn't taxed, it has to be near-0 to maintain non profit
| status. And, besides the normal games of revenue timing and
| amortization, they expense profitable activities to related
| parties.
| alephnerd wrote:
| > why would a hospital system choose to grow for instance?
| where would the $$ come from to buy other ones
|
| Not all networks are for-profit.
|
| By merging into larger networks, you allow hospital
| networks to consolidate the very expensive back-office
| processes like billing, insurance, IT, procurement,
| staffing, etc.
|
| All the intermediate "glue" needed for medical care has
| grown expensive due to either compliance or general
| profiteering, which forced consolidation in order to
| leverage economies of scale.
|
| This is why both for-profit and non-profit networks have
| been increasingly merging.
| mistrial9 wrote:
| as an outsider to this system of systems, I don't think
| anyone understand all of the parts, or all of the
| dynamics going on.. details with factual references are
| very much appreciated on this weighty subject!
| EasyMark wrote:
| I agree, someone, somewhere is making money off this stuff
| and know how to hide it or all these hospital groups would
| be belly up in a few years. What's even more scary is all
| the rural hospitals that are going bankrupt at an
| escalating pace (in the USA). I have lots of "country
| folk"relatives and I worry about them. The closest hospital
| to my mother Is 20 miles away, if that one shuts down the
| closest is 55 miles away. I have at least 5 within 5 miles
| of me, 2 of which are major regional surgical/oncology
| centers because I live in an urban area.
| JumpCrisscross wrote:
| > _seeing heavy consolidation in the industry which is a
| clue something fishy is going on-- why would a hospital
| system choose to grow for instance_
|
| Economies of scale. When an industry faces headwinds,
| characterised by broad-based low or negative operating
| margins, the standard move is consolidation.
| jandrese wrote:
| I think it means that administrators appear out of the
| woodwork to consume any potential profit a hospital may make.
| downrightmike wrote:
| We know they are screwing us: "What they show are price hikes
| ranging from 575% to 675% being automatically generated by the
| hospital's software."
| https://www.latimes.com/business/story/2021-12-10/column-hea...
| SoftTalker wrote:
| > What is even going on that allowed these to be nonprofits
|
| They are operating as non-profits, as defined by the IRS code
| and the law?
|
| "Athletic associations" for example includes your all your
| local youth sports clubs. There's a lot of activities that can
| be done for a charitable purpose that may be organized under
| 501(c)(3) and similar regulations.
|
| Yeah a Credit Union is like a bank, but it's not a bank. It's
| not operated for profit.
|
| All but the smallest non-profits all have to file an annual
| Form 990 which is mostly public. You can go look them up, if
| you're wondering what they do and how they spend their money.
|
| If they have income that is not directly related to their
| charitable purpose, they are supposed to pay tax on that.
| According to TFA that is weakly enforced, and while that may
| need fixing we need to be careful that we don't throw out the
| baby wth the bathwater.
| lmm wrote:
| What is the baby here though? What's the benefit to having
| all these entities be tax-exempt? Would it really be so bad
| for the likes of youth sport clubs to pay normal taxes on
| their (presumably tiny) profits?
| cmiles74 wrote:
| I work in the healthcare space and hospitals, in my opinion,
| are motivated by profit. The rise in private equity purchases
| of hospitals indicates that the money is going somewhere and
| it's certainly not any kind of "charity".
|
| Perhaps many small, poorly run hospitals have consolidated into
| a handful of large, poorly run hospitals. Still, that's no
| excuse to let Kaiser Permanente generate billions tax free.
| alephnerd wrote:
| > The rise in private equity purchases of hospitals indicates
| that the money is going somewhere and it's certainly not any
| kind of "charity
|
| MSOs are organized as LLCs, not 501c3 organizations.
|
| The kinds of hospital networks that are run as 501c3s would
| be something like a CommonSpirit Health, Advent Health, UPMC,
| Mass Gen Brigham, etc.
|
| > Perhaps many small, poorly run hospitals have consolidated
| into a handful of large, poorly run hospitals
|
| Kinda. That's how CommonSpirit Health came to be, except
| backend management is basically centralized.
| systemvoltage wrote:
| Wait... what's wrong with motivated by profit? If the service
| sucks, they'll lose customers.
|
| Focusing on profit is fundamentally sound unless you're a
| monopoly, which tend to be when Gov sticks its beak into
| things it shouldn't.
| cmiles74 wrote:
| I agree, there's nothing wrong with focusing on profit.
|
| The "non-profit" organizations are given tax-exempt status
| because they are centered around providing a public or
| social benefit, they explicitly should not be focused on
| providing a profit to their owners.
|
| In my opinion the majority of people can't afford to choose
| their hospital. Often it's the one that is within their
| means to travel and provides the service they require,
| regardless of the quality of their services. And, of
| course, after a serious accident you end up wherever the
| ambulance brings you.
| Keegs wrote:
| > If the service sucks, they'll lose customers.
|
| We're talking about hospitals. Many areas are served by one
| local hospital. And where there are several, it's typically
| the ambulance who decides where you go. It's also pretty
| difficult to compare one hospital with another.
|
| IMO hospitals resemble utilities where market forces aren't
| enough to guarantee good service.
| happyopossum wrote:
| > And where there are several, it's typically the
| ambulance who decides where you go, not you.
|
| Don't necessarily disagree with most of your sentiment,
| however the vast majority of hospital patients do not
| arrive in an ambulance, or even through the ER.
|
| A lot of hospital services are elective or planned
| (surgeries, pregnancies, etc) and for those I've found it
| very helpful to 'shop' for the best options.
|
| Also, the one time I was in an ambulance, they asked
| which hospital I wanted my daughter transported to.
|
| All that said, it isn't always possible or feasible to
| choose - but it's not because of an ambulance.
| vundercind wrote:
| Yeah, it's usually insurance network that decides where
| you can go (if you don't want to go bankrupt)
| systemvoltage wrote:
| You're making an assumption that a hospital is a
| monopoly. I explicitly said "unless it's a monopoly".
|
| Ok, if "many areas have one hospital"... I don't think
| that's true _at all_. Most areas have multiple hospitals.
| Most people live in metropolitan or suburban areas.
| jandrese wrote:
| Depends on your definition. Do you only have 1 local
| hospital if there is another in a city that is a 2 hour
| drive away? Maybe only 1 hour? 30 minutes? Where do you
| draw the line?
| wernercd wrote:
| maybe if regulations and taxes weren't so high, there
| could be more competition? Transparency and the like
| would help...
|
| Increasing taxes and removing alternatives is never a
| good deal.
|
| "market forces aren't enough" government forces aren't
| enough either.
|
| The VA is the penultimate example and I wouldn't wish
| that upon my worst enemy. That's where our veterans go to
| commit suicide in the parking lots waiting on help.
|
| 22 Veterans.
| rqtwteye wrote:
| "The VA is the penultimate example and I wouldn't wish
| that upon my worst enemy. That's where our veterans go to
| commit suicide in the parking lots waiting on help."
|
| The people I know who use the VA are quite OK with it.
| It's not perfect but none of them would want to put up
| with the insanity the rest of us has to.
| Clubber wrote:
| It really depends on the hospital.
| FireBeyond wrote:
| > We're talking about hospitals. Many areas are served by
| one local hospital. And where there are several, it's
| typically the ambulance who decides where you go. It's
| also pretty difficult to compare one hospital with
| another.
|
| Paramedic here. It's typically, effectively, your
| insurance that dictates how we decide where you go.
|
| If you're an acute, time-sensitive patient, then from a
| multitude of angles, "closest appropriate facility" makes
| sense.
|
| Perhaps you dislike a hospital, or it's inconvenient, and
| you're not as acute or timely a patient, and your view is
| "I want to go to X hospital, and since I'm paying, why
| shouldn't I get to choose?"
|
| As a paramedic, personally, I don't care.
|
| However.
|
| Your insurance does. And their perspective (sometimes
| rightly, and quite regularly wrongly) is that if you are
| well enough to bypass a hospital or multiple hospitals en
| route to a "chosen" facility, then did you need the
| ambulance? And if you didn't need it, why are "they"
| paying for it?
|
| What they want to see happen, and what generally is
| actually the better option, as a provider is "we will go
| to the closest facility where they will assess and
| stabilize you as needed. if you then wish to be
| -transferred- to your facility of choice, they will
| organize that" (and, since the insurance criteria and
| questions are met, and a physician ordered the EMS
| transport, you should be covered).
|
| Even beyond that, the area I'm in we have two hospitals.
| One is a Level 2 Trauma Center, one is a Level 3, but
| they're mostly comparable except for, well, acute trauma.
| We as providers will have a solid perspective of patient
| load in the ED of those hospitals, so I might ASK, not
| TELL you, hey, we might want to go to Hospital B, not A.
| And occasionally, though diversion is a convenience, not
| a concept under EMTALA (we can still absolutely show up
| at the ED with a patient even if they're "on divert"),
| some of the facilities here will round-robin to balance
| patient loads.
|
| (Also, don't start me on Certificates of Need, where new
| hospitals essentially have to get the permission of
| existing hospitals in the area before they can open -
| essentially, "will you be okay if we take patients away
| from you"...)
| refurb wrote:
| A comment on YC, a social media platform formed by a
| venture capital organization, and a comment saying
| "motivated by profit" gets downvoted.
| uoaei wrote:
| Almost as if communities are neither monoliths nor
| hiveminds!
| uoaei wrote:
| > fundamentally sound
|
| The language you've chosen is baldly ideological and
| leaaves no room for good faith discussion.
| Peanuts99 wrote:
| As someone from the UK this is a strange thing to hear
| about a healthcare institution. In my view the end user is
| a patient and not a customer.
|
| If a sandwich shop produces bad sandwiches then eventually
| people stop buying them and shop around. This doesn't work
| with hospitals. In the worst case, dead people can't shop
| around.
| gruez wrote:
| >The rise in private equity purchases of hospitals indicates
| that the money is going somewhere and it's certainly not any
| kind of "charity".
|
| Ironically when they get bought out by PE they lose their tax
| exempt status, so that's kinda solving the problem.
| Projectiboga wrote:
| If purchased with "carry forward" capital than it becomes
| tax differed until any of that is withdrawn.
| twoodfin wrote:
| That's apples and oranges. PE-owned businesses pay
| corporate income tax just like any other for-profit
| entity.
| jadbox wrote:
| Credit Unions are far more than just banks. That's like saying
| Apple iOS and Linux are pretty much the same. They both do have
| similar features, but the relationship towards the user/member
| is arguably different in practice. I.e. cooperative owner vs
| customer-to-extract.
| garciasn wrote:
| That's like comparing for-profit higher ed and not-for-profit
| higher ed.
|
| Both are entirely motivated by money; one just is overt about
| it.
|
| Everyone is all about making the most money in the fastest
| way possible and few truly give a hoot about the people they
| use to achieve the goals.
| danudey wrote:
| Both are motivated by _money_ , but only one is motivated
| by _profit_. The drive to increase profits over and over,
| year over year, indefinitely is to the detriment of society
| as a whole.
|
| Meanwhile, not-for-profit entities like credit unions don't
| need to justify _not_ making an extra few billion dollars
| this year compared to last year, meaning they 're less
| likely to make customer-hostile moves for their own sakes.
| AlbertCory wrote:
| What no one has stated so far is: jobs and salaries at non-
| profits have almost no discipline applied to them; market
| or otherwise. If they lose a little more money this year:
| ok, so what?
|
| WETA (the public TV station) paid Sharon Percy Rockefeller
| $855,000 in 2022. The 12 highest paid employees all made
| more than $300,000. Maybe they are all "worth it" but how
| could you prove that WETA wouldn't function just as well at
| median salaries for everyone?
|
| https://apps.irs.gov/pub/epostcard/cor/530242992_202206_990
| _... (page 71)
| jltsiren wrote:
| From my non-American perspective, any organization that
| exists to provide material benefits to its owners / members /
| employees / other affiliates is a for-profit organization. A
| non-profit should pursue public interests, and only its core
| activities should be tax exempt. If a non-profit operates a
| business, that business should pay taxes normally.
| nickff wrote:
| The problem is that there are no truly 'public' interests,
| there are only clusters of private interests. Going down
| this route would eliminate all non-profits (which I'm not
| entirely against).
| jltsiren wrote:
| And other people claim that the personal is political and
| that there are no truly private interests.
|
| In practice, there is a shared understanding what acting
| in the public interest means in that particular society.
| Laws can also provide a non-exhaustive list of examples
| to clarify the meaning.
| nickff wrote:
| I disagree that there is a 'shared understanding'; for
| instance, the latest Freakonomics podcast episode
| featured an interview where the subject stated that live
| theatre was a social good that was critical to a
| functioning society, and worthy of public subsidy. I like
| theatre, but think it's a luxury good. There are many
| similar 'interests'.
| jltsiren wrote:
| It obviously depends on the society. Theatres run or
| subsidized by a state or a city are common. In many
| countries, supporting national culture is seen as one of
| the key functions of the government. Most people in those
| countries agree with that, and even those who don't
| generally understand that they are in the minority.
| lmm wrote:
| > In practice, there is a shared understanding what
| acting in the public interest means in that particular
| society
|
| No there isn't lol. Half of society thinks promoting one
| political party is in the public interest, the other half
| thinks promoting the other one is. Same for religions,
| same for handling unwanted pregnancies, same for
| education...
| PaulDavisThe1st wrote:
| "Profit" means income in excess of expenses, and in for-
| profit companies the profit is used either reinvested or
| paid to the owners as a dividend.
|
| Credit unions (and other US 501c3 organizations) do not
| exist to make a profit, and any income they have in excess
| of expenses is reinvested. There are no dividends.
|
| These are two utterly different sorts of things.
| jltsiren wrote:
| As I said, that was my non-American perspective.
|
| You gave a specific legal definition in a single
| jurisdiction. It does not match the definition in many
| other jurisdictions or the intuitive understanding many
| people have.
|
| From my perspective, there is no fundamental difference
| between an ordinary company distributing its profits as
| dividends, an employee-owned company distributing profits
| as higher wages or bonuses, and a coop distributing its
| profits by providing better/cheaper services to its
| members. They are all for-profit businesses. Only the
| mechanisms of profit distribution are different.
| rqtwteye wrote:
| "Credit unions (and other US 501c3 organizations) do not
| exist to make a profit, and any income they have in
| excess of expenses is reinvested. There are no
| dividends."
|
| A lot of non-profits funnel the "income they have in
| excess of expenses" to their execs or friends of the
| execs who provide business services. They don't reinvest
| or give to charity.
| bongodongobob wrote:
| I don't see the difference. Just increase what you pay
| your execs. Boom, you didn't make a profit.
| piperswe wrote:
| If there are no dividends, then why is my checking
| account called "Dividend-Bearing Checking"?
| justin66 wrote:
| > Credit Unions are nice, but they're still just banks.
|
| That's just lazy and ignorant. This falls into the _please read
| the relevant material on wikipedia_ category.
| eli_gottlieb wrote:
| >The median operating margins for hospitals is around 0% or
| some times negative. Injecting more costs into the system is
| only going to push prices further upward.
|
| Well if they can't run themselves within a budget constraint
| and require outside subsidy/transfers to function, they should
| be public services rather than private firms, for-profit or
| nonprofit.
| bobthepanda wrote:
| Credit unions and regional banks have historically been
| advantaged in the US because these types of lending
| institutions make up a disproportionate amount of rural and
| small business lending.
|
| One notable feature of the banking system in the US is that
| it's relatively unconcentrated. Only three major banks hold
| more than 10% of deposits in the US, at which point the feds
| actively block bank mergers barring something exceptional, like
| JPMorgan Chase absorbing SVB to save it.
| Workaccount2 wrote:
| Amazon didn't make money for years.
|
| These hospitals are spending immensely on expansion. Just think
| about how every (or the one) hospital around you seemingly has
| all manner of offices and facilities everywhere. Many even have
| gyms/"wellness centers".
|
| You don't build a gym when you are borderline bankrupt. You
| build a gym when you need to spend money.
| tiffanyh wrote:
| > The median operating margins for hospitals is around 0% or
| some times negative. Injecting more costs into the system is
| only going to push prices further upward.
|
| You only pay taxes on Profits (not Losses).
|
| So what's the argument you're trying to make?
|
| It's not like paying taxes would cause you to become
| unprofitable.
| dgtfxxtfhh wrote:
| Nope. Property taxes.
| maximilianroos wrote:
| Having non-profits pay property taxes -- similarly to how
| they pay employer taxes -- seems like a good step. Property
| taxes are in part a fee for benefits which non-profits
| receive.
|
| It would also incentivize local governments to encourage
| the growth of non-profits. Currently Cambridge's tax
| revenue is negatively affected by Harvard's growth...
| moomin wrote:
| I mean, if they're not turning a profit, taxation isn't going
| to be a problem, but what I really want to know is: the USA has
| the most expensive health care system in the world, with the
| worst outcomes of any first world system. How is it not making
| money?!
| glompers wrote:
| A healthy proportion of local American hospitals were set up
| and later expanded through many, many rounds of charitable
| proto-crowdfunding in the first place. Fraternal (Shriners),
| ones with Saint in the name, and so on.[0] Credit unions were
| of course formed to provide local lending pools in good times
| and bad and to smooth out the peaks and troughs of credit
| availability.
|
| The phenomenon that a lot of American credit unions now
| advertise and compete with the capital markets (for where to
| get money from, or where to invest it) and with interstate
| banks, or that farm-credit nonprofits compete with nationwide
| programs, is an unanticipated and relatively recent legal
| development (and most interstate banking holding companies
| themselves are only 40-50 years old - before that, they
| couldn't coordinate across state lines).
|
| The wider phenomenon that it sometimes seems like "everybody
| with the choice to do so" is merging into the fast lane due to
| red tape and other incentives is partially sampling bias, but
| even if it's true I don't consider it to provide proof that we
| should get rid of any remaining slow lanes. Probably we need
| more specific types of slow lanes, some of which will let you
| switch lanes later but cost you the back taxes.
|
| There are many different nonprofit tax code section 501 types
| already, but I don't think that nonprofit status itself is a
| very well tailored conceptual solution to answer "what kind of
| slow lanes are useful nowadays?"
|
| There are many commons and cooperative options that are hard to
| shoehorn into 501(c)(3). It would be nice to have some social
| benefit activities protected from taxation even in otherwise-
| taxable cooperatives. While some American state legislatures
| have enacted a "Low Profit Limited Liability Corporation" or
| L3C status available, the first thing you learn about it is
| that it is no different in tax status from any other LLC. HM
| Government in the UK offers a CIC or Community Interest Company
| business model, and this requires all profits to be reinvested
| for the benefit of a geographical area designated by the
| enterprise, and has an asset lock so that its possessions
| cannot be distributed to shareholders, although there can be
| shares traded -- all of which might be steps in a promising
| direction. But again there is no tax exemption (partial or
| total) for which these social enterprises are specifically
| eligible.
|
| [0] https://en.m.wikipedia.org/wiki/Jewish_Hospital
| clcaev wrote:
| Perhaps limit employee income differentials in these non-
| profits and have stricter rules regarding definition of
| employment.
|
| Require democratic voting among a broad membership, including
| customers and/or employees, not a tiny board passed down among
| a small group of insiders.
|
| Of all of these, I support credit unions having this status.
| Their members have a democratic vote.
| francisofascii wrote:
| Setting more appropriate land taxes would be a good start, which
| is much easier then trying to figure out how to tax income. The
| harder part is reducing the tax liability based on the "public
| good" or "how benevolent" the organization is. Hard but not
| impossible. For example, a private golf club would pay higher
| taxes than a public golf course. Or a church that allows anyone
| in or has tons of community outreach to the neighborhood pays
| less or no taxes vs a church that has tons of requirements or
| hoops to jump through.
| downrightmike wrote:
| According to Glassdoor, the average salary for a Catholic
| priest in the United States in 2024 is $104,699 per year, with
| an estimated total pay of $206,187 per year. This includes an
| estimated additional pay of $101,488 per year, which could
| include cash bonuses, tips, commission, and profit sharing.
|
| https://www.glassdoor.com/Salaries/catholic-priest-salary-SR...
| francisofascii wrote:
| I don't think that figure is accurate. Most priests make
| under 100K. And priests are taxed as individuals, not as non
| profits, so I am not sure of the relevancy.
| svieira wrote:
| The fact that the second entry on that list was "Baptist
| Hospital" makes me _slightly_ suspicious of the validity of
| the data.
| laweijfmvo wrote:
| sorry, what "profit" sharing??
| ecshafer wrote:
| Priests are taxed as individuals so this doesn't seem
| relevant. But besides the fact that glassdoor's salary
| estimates are at best ludicrously off. Several of the top
| companies for "Catholic priest" on that page are protestant
| organizations, so I will take this with a grain of salt.
| gumby wrote:
| Hear hear. But why not abolish the category completely?
|
| > The U.S. needs a principled, rules-based approach to 1)
| distinguish between benevolent organizations and tax-exempt
| businesses,
|
| There's no reason why a food kitchen, museum, university, church
| or whatever can't simply run at a loss in perpetuity (or until it
| can't get any more donations). No decision on its tax status is
| needed.
|
| Charities pay the same price for phone service, postage,
| salaries, rent etc. Yet we'd have a complex infrastructure for
| deciding if they should get a break on one line item, taxes.
| Sawing off that whole infrastructure would simplify things
| greatly.
|
| I don't mean to sound like some Libertarian here. It's just that
| I've long considered the distinction between "non profit" and
| "for profit" crazy.
| readthenotes1 wrote:
| It's another complication in the tax code for the cognoscenti
| to exploit
| spyckie2 wrote:
| Policy is not always about how much tax one pays, it's about
| landscaping your society.
|
| The difference between a town with unique, local shops and a
| town with sprawling landscape of walmarts is the policies of
| those towns, one of the big ones being tax code. Policy is just
| a way to execute on decisions for what kind of social outcomes
| your society wants.
|
| In this instance, abolishing the category completely is
| essentially saying we don't want any non-profit organizations
| to exist as a legal structure, which is probably not the
| intention.
|
| Policy design favors strongly directed outcomes over reducing
| complexity of legal code (because we have a robust legal
| institution). So, yes, it is increased complexity. But most
| complexity is not out of reach. Most small organizations have
| the budget to handle policy complexity, even if many
| individuals do not.
|
| Ideally, good policy is tested as well and actually creates the
| effect it was intended for. A great example of bad policy
| design, IMO, is the plastic bag ban in California. Its
| intention is to reduce plastic waste, but the actual
| implementation probably didn't.
|
| All in all, it's a deep issue because you can then argue if the
| non-profit status really creates benevolent organizations AT
| ALL, or if it just creates tax-exempt businesses. But if you go
| down that route, you're essentially "joining" in the
| conversation - it's exactly what this article (or the research
| behind the article) is trying to figure out.
| toast0 wrote:
| > Charities pay the same price for phone service, postage,
| salaries, rent etc. Yet we'd have a complex infrastructure for
| deciding if they should get a break on one line item, taxes.
| Sawing off that whole infrastructure would simplify things
| greatly.
|
| I mean, they often don't pay the same prices. Recognized
| organizations often have a lower price option for many
| services. Landlords often charge below market rent to
| charities. Utilities often have a lower tariff for charities.
| Charities may not have to pay sales tax, so the goods they need
| are less expensive (yeah, that's another tax, but). Nonprofit
| Mail is printed material eligible to be mailed as USPS
| Marketing Mail(r) at significantly reduced nonprofit postage
| rates. [1]
|
| Salaries sure, except there's a good amount of people who will
| work for less or free, if it's for a charity they find
| compelling.
|
| Qualifying for the break on income taxes drives the discounts
| on all the other things.
|
| [1] https://faq.usps.com/s/article/What-is-Nonprofit-Mail
| bombcar wrote:
| From a 10000 foot view, the non-profit designation is the way
| the government says "the tax we'd get from you, and your cost
| to file the paperwork, is not as valuable as what you
| provide, so we'll skip it."
|
| It's one of the available "force multipliers" that the
| government has to try to "cost X but do Y" - just like
| backstopping loans, etc.
|
| It does distort the "market" - that's the whole point.
| gumby wrote:
| Actually non-profits to have file just as much annual
| paperwork as a regular tax return, plus getting the status
| takes a long time and involves a lot of paperwork too.
|
| And if they aren't making a profit they aren't paying
| taxes, regardless of filing status.
| Laaas wrote:
| Non-profit tax exemptness is good actually. It incentivizes
| charity over profit-seeking ventures. Changing this would
| increase taxes in the short term but be bad long term.
| addicted wrote:
| Unfortunately non profit != charitable.
|
| That's what this article is all about. Separating charitable
| non profits from non charitable non profits and taxing the
| latter.
| Laaas wrote:
| No, a non-profit is by definition a charity _for something_.
| It's a public benefit, and thus not taxed.
|
| If it's not a charity, but uses 501(c)(3), that's just tax
| fraud! Tax fraud is already illegal!
|
| You read the law at
| https://www.law.cornell.edu/uscode/text/26/501
| addicted wrote:
| I deliberately avoided the usage of the term "charity"
| because the legal definition for tax purposes is indeed
| different from what people colloquially think of as
| charities.
|
| I used the unwieldy terms "charitable non profit" and "non
| charitable non profit", and your link proves me right by
| explicitly pointing out that charitable organizations are
| only 1 form of non profit that is tax exempt.
|
| > exclusively to religious, charitable, scientific,
| literary, educational, and fraternal purposes
| HDThoreaun wrote:
| Most hospitals are not charities. Theyre run by MBAs and
| everything is about profit margins
| readthenotes1 wrote:
| I know someone in real estate who is advised by his wealth
| advisor to set up an apartment building that gives lower rents
| to wounded veterans in his small town.
|
| That way it would be non-profit and he wouldn't have to pay
| property taxes and the one or two wounded veterans might get a
| good place to stay but he would be making bank with the other
| tenants
| bombcar wrote:
| As a note these kinds of things the IRS figures out ...
| eventually, and then they have you.
|
| The realities of real estate investment involves a ton of
| things, but there is probably some advantage to renting to
| veterans, it's not to the point of writing off the entire
| income from an entire building.
| SketchySeaBeast wrote:
| The trick there would be to actually incentivize charity
| instead of bloat and wallet fattening.
| rqtwteye wrote:
| That's the theory. In practice it incentivizes a lot of
| corruption.
| egh wrote:
| Incoherent argument. Non-profits pay sales taxes, income taxes
| for employee salaries, and, in many cases, property taxes. The
| only thing they aren't ever paying taxes on is profits,
| because... they are non-profits. They don't pay out profits to
| owners.
|
| Some non-profits are exempt from property taxes and other taxes
| (e.g. universities) and abuse this by becoming huge landowners.
| This should probably be reined in.
| bombcar wrote:
| You can pretty closely simulate a non-profit with a for-profit
| enterprise with a bit of "clever accounting" _as long as you
| 're not taking profits out_.
|
| Once they come out, they get taxed, as salary or distributions.
|
| What the for-profit ALSO gets taxed on is "income" but if you
| manufacture expenses you can keep your income low or non-
| existent (this is what companies do when they transfer their IP
| to a tax haven and then charge themselves for it).
| oceanplexian wrote:
| It's ridiculous we are trying to find more ways the government
| can rent-seek. Corporations are taxed on profits, they are
| taxed when they pay employees, the employee is taxed on their
| income, and the employee's post tax dollars go to pay sales
| tax, the remaining money goes to businesses that pay tax, and
| then the whole thing repeats again. The government is a literal
| parasite on the economy.
|
| I am repeatedly surprised when people argue that lower taxes
| don't improve the economy, it's as obvious as water being wet
| or the sky being blue.
| EasyMark wrote:
| I think it's because most people who declare "less taxes are
| good for the economy" don't want to pay taxes at all and
| would be willing to let infrastructure and society rot in
| order to make a few more dollars. There has to be an optimal
| level, and surely it isn't always "less".
| Jach wrote:
| Meanwhile the infrastructure is not exactly doing great in
| many places, and it seems doubtful that it would be doing
| particularly better with more taxes collected. Anyway,
| there's been a pretty clear trend towards not-less, even in
| just the last few decades (really, compare quality of
| services and infrastructure at revenues and debts in the
| 90s to now), without a clear sign that it's actually worth
| it or that more would make anything better. A fruitless 20
| year war didn't help either.
| Teever wrote:
| How does infrastructure look in places like Norway and
| Finland?
|
| Why can those countries have what they have but America
| some how can't?
|
| What are they doing that America isn't?
| asdasdsddd wrote:
| They have a high trust society where people follow rigid
| norms thereby lowering the cost for infrastructure. For
| example, they probably don't need to clean the streets as
| much because people don't shit on the sidewalk.
| Clubber wrote:
| >and would be willing to let infrastructure and society rot
| in order to make a few more dollars.
|
| _In fiscal year (FY) 2023, the government spent $6.13
| trillion._
|
| _The federal government spent $44.8 billion on
| infrastructure in 2023 and transferred an additional $81.5
| billion to states._
|
| That's a hair over 2%. Certainly you can imagine people
| wanting to cut the budget in other places.
| Dalewyn wrote:
| >They don't pay out profits to owners.
|
| And then there are damning examples like Mozilla
| Corporation/Foundation.[1]
|
| There are organizations that should be registered and handled
| as non-profits, but I also think a lot of the non-profits today
| are scams warranting a clean up.
|
| [1]: https://assets.mozilla.net/annualreport/2022/mozilla-
| fdn-990...
| bhelkey wrote:
| This is a sixty page document. Is there something specific
| you want to call attention to?
| Dalewyn wrote:
| 1. It's a non-profit organization, see page 2.
|
| 2. The chairman received just over $6.9 million dollars in
| compensation, see page 8.
|
| 3. Consider the above against what I replied to earlier.
| asdasdsddd wrote:
| The 6.9 million is income taxed so what's the problem, it
| would be the exact same tax scheme if it was a for-profit
| business.
| Dalewyn wrote:
| One of the justifications argued for non-profits is they
| "don't pay out profits to owners".
|
| MoCo/Fo is one, particularly outlandish, example where a
| "non-profit" makes a substantial profit and pays it out
| to its owner(s).
| ProllyInfamous wrote:
| Tax. The. Church.
| loco5niner wrote:
| When I tithe to my church, I've already been taxed on it. It
| would be a real bummer for it to be taxed again.
| AnimalMuppet wrote:
| You're not taxed on it if you deduct your charitable
| contributions. (Presuming you're in the US, and don't make so
| much that you're under Alternative Minimum Tax, and maybe a
| few other assumptions...)
| kemotep wrote:
| It's hard to take the Tax Foundation seriously when they say we
| need to aggressively go after non-profits when one of their
| current top articles is handwringing about the Trump tax cuts
| expiring.
|
| The tax code absolutely needs to be simplified. Corporate taxes
| are not as efficient as Land Value taxes but if lowered or
| eliminated it and replaced it with the LVT, what would that even
| mean for "non-profits" at that point?
| jeffbee wrote:
| There's something weird about the article, as if "1 billion" has
| been used as a placeholder for a real figure that was never
| filled in. For example in at least two places it says that the
| gross and net tax gaps are $1 billion, but the IRS estimates are
| close to $500 billion.
| csdreamer7 wrote:
| A lot of complaining about the tax exempt economy, but almost
| nothing about large corps that get away with deferring taxable
| income; and would lead to much fewer grants and dues from these
| companies that pay the Tax Foundation's bills.
|
| The Tax Foundation glosses over, and sounds defensive, over the
| swiss cheese rules for corporations right now. A lot of us have
| been discussing a tax credit that Congress recently changed that
| only large tech companies would see a tax benefit to take over
| the paperwork.
|
| https://taxfoundation.org/blog/corporations-zero-corporate-t...
|
| Then there are flat out tax breaks such as oil revenue being
| exempted from AMT with generous deductions that normally take
| other firms years to get.
|
| https://www.investopedia.com/articles/07/oil-tax-break.asp
|
| A few of the organizations they complain about are either owned
| by the US government, works very, very closely with US govt, or
| are state institutions. Why should the US tax itself? It just
| adds more paper work because it would need subsidies. A US
| Government institution has so many more responsibilities than a
| private corporation. The real reason is that many large corps
| want to get rid of the spoiler in their market and already
| collect even more revenue (make credit unions and the deals they
| offer go by-by).
|
| Congress enacted these institutions decades ago to stabilize the
| market and provide access to people the corps did not want to
| serve. Banks are still retreating from rural areas-think of how
| much worse it will be if credit unions have to more profit
| focused.
|
| Taxing state institutions such as universities; this US Supreme
| Court will not be receptive to that even if Congress does pass a
| bill; and politically, it is not going to happen.
| jedberg wrote:
| I'm ok with hospitals not paying taxes. In fact it would be great
| if they got tax credits. Any taxes imposed on hospitals will just
| make health care cost more and not provide any benefit to
| society.
| rqtwteye wrote:
| Yes, let's pump even more money into an already obscenely
| overpriced system.
| jedberg wrote:
| The assumption is that any credits would be tied to lowering
| costs for patients.
| Analemma_ wrote:
| And that assumption is insane.
| rqtwteye wrote:
| Lowering cost for patients is not an objective of this
| system. They will take the money and pay their execs and
| shareholders more.
| tmpz22 wrote:
| > An "Outside the Lines" investigation of 115 charities founded
| by high-profile, top-earning male and female athletes has found
| that most of their charities don't measure up to what charity
| experts would say is an efficient, effective use of money.
|
| https://www.espn.com/espn/otl/story/_/id/9109024/top-athlete...
| ein0p wrote:
| With the Congress as rotten and corrupt as it is today, good luck
| trying to "rein in" anything of this magnitude. I'm sure the
| bribes will be quite a bit fatter though if they pretend to be
| interested in solving this problem.
| wernercd wrote:
| Yes... lets make life more expensive by getting rid of taxes.
|
| The reason life is so expensive OBVIOUSLY isn't because of the
| massive and ever increasing tax burden. NOOOO of course not. Its
| because people aren't taxed enough.
|
| So lets increase taxes more so we can have goverment solutions to
| the government problem. Obviously we simply aren't governmenting
| enough.
|
| Yo dawg... I heard you like government. So I got some government
| to put in your government!
| apsec112 wrote:
| US taxes as a percent of GDP are close to post-WWII lows
|
| https://www.crfb.org/blogs/2023-revenue-plunge-confirms-2022...
| nycticorax wrote:
| Don't most economists think that corporate profits should not be
| taxed? (When all else is held equal.) By that argument, the real
| problem is taxation of the profits of for-profit corporations...
| mcmcmc wrote:
| No, that's a wild generalization. _Some_ economists think that.
| Some are paid to say it. And many more think the opposite.
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