Criticisms of Tax Exemption

The concept of tax exemption receives considerable ongoing attention and review, and recurring criticism. The sharpest focus is on charitable organizations; in recent years, critics have concentrated on public charities-quite frequently, healthcare organizations. Tax exemption and tax deductibility shrink the income tax base, forcing the remaining taxpayers to bear increasing tax burdens as the demand for governmental programs rises. Tax exemptions for nonprofit organizations are not escaping this severe scrutiny. The U.S. Supreme Court has unanimously embraced the thought that charitable contribution deductions are tax expenditures. The commerciality doctrine is one of the most important general elements of the law of tax-exempt organizations today. Applications of the doctrine are transforming the law stating the bases for tax exemption. The commerciality doctrine flourished during a period in the early 1960s, in the context of the courts’ scrutiny of nonprofit publishing organizations. Controlled Vocabulary Terms income tax; Nonprofit organization; Tax exemption