Elsewhere online
January 26, 2015

Maine Plan Stakes New Ground in Debate on Taxing Nonprofits

Maine Gov. Paul LePage's proposal to add big nonprofits to property-tax rolls reflects the growing national debate over tax breaks for hospitals, colleges, and other major exempt institutions, The Wall Street Journal writes. The issue is particularly acute in northeastern states, which have both a high concentration of academic and medical institutions and a heavy reliance on property taxes to fund government.

As part of a sweeping tax overhaul aimed at lowering bills for families and businesses, Mr. LePage's budget would mandate that Maine municipalities tax nonprofits' real-estate assets over a value of $500,000, at half the normal rate. While state legislatures nationwide have considered, and rejected, standalone plans to tax nonprofits, the Maine proposal is believed to be the first to embed such a proposal in a governor's prospective budget and is thus shining a brighter light on the issue.

Adoption of the plan "would be a stunning development," said Daphne Kenyon, a fellow at the Cambridge, Mass.-based Lincoln Institute of Land Policy. "I think there would be all kinds of reaction, from litigation to nonprofits’ possibly moving."