Tuesday, May 27, 2008

Private and public charity 

A NYT article on charities being taxed in Minnesota draws interest from James Joyner and Tyler Cowen. Cowen comes up with some rather interesting list of which not-for-profits should be taxed, based it appears on a public goods argument. Joyner is more circumspect:
I tend to agree that Harvard�s endowment should be tax exempt since its proceeds to go legitimate educational endeavors and are not �profit� pocketed by stakeholders. But I�m not sure the lines are particularly bright.
But non-profit or not-for-profit is simply a decision of how the excess of income over expenditures are taken by those who have a residual claim. In short, you can't take it as personal income of some form or another. But you still get to have a nice car with driver, or a fancy boardroom, or what-have-you. My colleagues Bill Luksetich and Mary Edwards and UNLV professor Tom Carroll wrote a paper examining those differences with regards to Minnesota nursing homes. Government and non-profit nursing homes spent more per resident than the for-profit ones. (I do not know if they or anyone else has found evidence on quality of care by organizational form.) Bill's done similar work with symphony orchestras and museums, too numerous for me to list here. So non-profits might make a lower amount of net benefits than for-profits (since the latter can consume those more efficiently) but non-profits do fiddle their expenses to obtain some private gains.

But that said, doesn't government do the same thing? Ever walk into the cafeteria of a Federal Reserve? The old building in Minneapolis had one that was pretty swank. Might we consider taxing those activities too?

Labels: , ,