Unleash Prosperity is a non-profit, so this is an admission against our own interests, but non-profit tax status is one of the largest and most destructive distortions still in the federal tax code.
Why are hospitals and universities – with hundreds of billions of dollars of endowments – and credit unions tax exempt?
In a new study, Scott Hodge, Roger Meiners, and Andrew Morriss make the case that we’ve been making for years that these commercial activities should be taxed.
They find:
Of the $2.5 trillion in revenues collected by section 501(c)(3) organizations in 2019, 55 percent were generated by nonprofit hospitals and health insurance firms, and another 12 percent were generated by higher education entities such as colleges and universities.
It is no coincidence that these are the two sectors that have seen the steepest price increases for consumers and a neverending flow of explicit taxpayer subsidies on top of their tax benefits.
The idea that some sectors are so important that they should be non-profit is exactly backwards: the profit-motive is the single best mechanism for allocating resources yet discovered. Taking on these tax exempt giants is the next frontier for federal tax reform. We could reduce tax rates by more than 20% if every industry paid their fair share.
The post To Get to a Flat Tax, Tax the Tax Exempt appeared first on Unleash Prosperity.
