As Congress continues to debate changes to the tax code, Arnold Ventures tax and policy fellow Scott Hodge is featured in The Chronicle of Philanthropy as “the leading voice calling for greater taxation of nonprofits that are ‘businesslike in function.’”
“Hodge argues that the nonprofit world is dominated by large charities that should be paying taxes. … ‘This is a debate that goes back 120 years,’ Hodge says. ‘Even when nonprofit status was being debated in 1909, there was concern about the slippery slope of allowing certain types of business income to be tax-exempt.’”
The numbers are striking. The nonprofit sector generates $3.3 trillion annually. According to estimates, taxing the business-like income of certain nonprofits — such as hospitals, insurers, and trade associations — like corporate income could raise up to $40 billion a year.
The article also highlights Hodge’s focus on taxing the endowments of large universities—an issue he’s been discussing on radio stations nationwide.
Ultimately, this is about modernizing a system that hasn’t kept pace with the scale and complexity of today’s tax-exempt economy. As Hodge notes: “The world that we traditionally think of as ‘charity’ is shrinking. The charitable portion of this tax-exempt economy is very, very small.”
Hodge also recently authored a Tax Day op-ed in the Pittsburgh Post-Gazette
about the need for fiscally responsible tax reform, and published a policy brief on capping the SALT deduction for businesses.
