Maine Governor Proposes Taxing Large Charities

Wall Street Journal, Maine Gov. LePage Wants to Tax Big Nonprofits:

A sweeping proposal to cut taxes for Maine families and businesses could upend one of the most widely accepted practices in the country: the property-tax exemption for nonprofit organizations.

A recent budget plan by Republican Gov. Paul LePage calling for an overhaul of individual, corporate and sales taxes also would make Maine the first state in the nation to require colleges, hospitals and other large charities to go on the property-tax rolls in their municipalities.

“It would be a stunning development,” said Daphne Kenyon, a fellow at the Lincoln Institute of Land Policy in Cambridge, Mass. “I think there would be all kinds of reaction, from litigation to nonprofits’ possibly moving.”

Every state has laws that exempt churches and federally designated nonprofit groups from property taxes, although which holdings qualify can vary from place to place. Nonprofits say the special status is needed because they provide vital programs that governments often don’t.

Mr. LePage’s administration argues that the groups rely on local services, and the practice unfairly drives up property taxes for others. Churches and government-owned entities would be exempt under Mr. LePage’s proposal, which must be approved by the state Legislature.

The plan reflects a growing national debate over the nonprofit exemption, especially in the Northeast. The region relies heavily on property taxes to fund government and has a particularly high concentration of tax-exempt academic and medical institutions, according to the Lincoln Institute. ...

Mr. LePage, who just began his second term, would lower top individual and corporate income taxes, broaden the number of goods and services covered by the sales tax and offer tax credits for low-income residents. He said his plan would make Maine more competitive and attract more young families to the nation’s grayest state