The Exemption of Nonprofit Organizations from Federal Income Taxation

Abstract

See note 70 infra. 14. Using language that is strikingly similar to recent discussions of "tax expenditures," a 1958 comment on the tax exemption of charitable institutions asserted that the exemption "differs only in method from a disbursement of government funds" and can be justified only "when the public interest is served in much the same manner as when public funds are properly expended." Reiling, supra note 1, at 595. For the concept of tax expenditures, see OFFICE OF MANAGEMENT AND BUDGET, SPECIAL ANALYSES, BUDGET OF

Economic Theories of Nonprofit Organizations

“…In practice, it is difficult to translate this into operational measures of asset value and to design public policies that effectively enforce nondistribution. This is an area where economists and lawmakers are playing catch up, but some progress has been made (e.g., Gray, 1997or Goddeeris &: Weisbrod, 1999 Rahdert, 1976;Colombo &: Hall, 1995;Gergen, 1988;Simon, 1987). However, the concept of "treasury efficiency" first proposed by Vickrey (962) and extended and proved by Roberts (987) (see also Andreoni &: Bergstrom, 1996) counts as a major contribution by economists to this debate.…”

Why Are Nonprofits Exempt From the Corporate Income Tax?

“…Bittker and Rahdert (1976) state that net income is well defined for for-profit organizations because they are in the business of maximizing it. For nonprofits, they claim, we cannot coherently define the tax base because there is no pursuit of profit.…”

Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax

“…Donors shouldn't be able to deduct such contributions, and the additional tax on the transfer should turn on the income of the beneficiaries, potentially rising from a negative tax to a relatively high tax rate. Bittker and Rahdert 1976). Most tax incentives operate through deductions, exclusions, and, more rarely, nonrefundable credits.…”