Feeding the Beast: General Assembly Looks to Take a Bite Out of Non-Profits

“Desperate times call for desperate measures”, right? So now we learn that the RI General Assembly is looking at taxing non-profits to earn more “revenue.” The method will be via suspension of the tax-exempt status by removing the sales tax waiver that non-profits receive (the GA isn’t considering property taxes or taxing donations…yet). According to the Steve Peoples’ story in the ProJo, this will effect 6,600 nonprofit organizations, including churches, hospitals, private schools, youth sports leagues, PTO’s/PTA’s and the YMCA among others.
It’s obvious that the General Assembly has done a poor job of managing state revenue and has made poor choices in what it prioritizes for spending. I’m also sure there are those who will argue that hospitals and private schools and the larger non-profits that proliferate in this state can afford to be taxed. But what about the Parent-Teacher groups and sports leagues and any number of smaller non-profits? Many of these groups help fill the gaps caused by budgetary oversights and misplaced priorities that have trickled down from the General Assembly into our cities and towns.
For instance, with more education dollars going towards personnel costs, it is up to the Parent-teacher groups to pay for programs–field trips, assemblies, etc.–that once were funded by the school districts. In Warwick, youth sports leagues help keep Jr. High age kids on fields because Warwick schools don’t offer organized sports. Levying the sales tax will leave less money to spend on an event at a school or available for financial aid to help a kid from a poor family play ball with his friends.
Then there are animal shelters and soup kitchens and hundreds of other small groups of people giving of their free time to do what they can to help the community. They didn’t expect the government to help pay for things, but asked instead to be left alone and given a tax break in recognition of the good works they perform. These groups certainly didn’t expect to be taxed for giving a helping hand. This really is shameful.

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13 years ago

Good points. But as you suggest, there are non-profits that are abusers and which should be paying more: most importantly, the large non-profit higher education institutions like Brown University, Johnson & Wales, and the like. The Blue Cross and Blue Shields probably also should be included. They have many operations barely if at all related to their tax-exempt purpose that earn money that should be taxed; many of their salaries are shockingly high. They also have many exemptions under state law, established years ago, which should be ended. Going after the small fry is inappropriate; start with the largest (and of course most politically untouchable). Locally and nationally, all assumptions about tax exemptions for non-profits should be reexamined in detail.

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