Should ANY entity, organization, group...whatever... be tax exempt? If yes, what is the qualifier?

[hfojvt]

12. what IS their fair share though?

I mean, any NON-profit is tax free, because there is, at least in theory, no profit to tax. Yet there may be wealth accumulated.

I can give a few examples that I have some knowledge of.

1. Start with the water department - it, is a government entity. One, fortunately with no private competition, except bottled water and perhaps the water departments of neighboring towns. However, if run well, it does make a profit and it does accumulate reserves. Ours, where I have been on the elected board the last four years, made about $800,000 in profit last year and has accumulated reserves of about $12 million. My problem is that the elected board and the hired manager want to run it like a business - to maximize profit and increase reserves. I tried to argue differently. As it is supposedly "owned" by the voters, the only dividends the owners get back is in the form of lower water rates. That the goal should be, instead of profits of $800,000 to lower water rates by about $60 per customer (which would still leave about $200,000 in "profit" not including some $600,000 or so which is written off as "depreciation&quot

2. the local credit union - unlike the local bank, it is not taxed, since it is theoretically a non-profit. Yet is made about $600,000 in profit this year and has accumulated "reserves" of about $10 million. I claim, however, that it seems to be run just like a bank. As a member for ten years, presumably I have a share in those increasing reserves. Yet, I get almost nothing from that fact. In this case, I went to a board meeting and made a proposal to the board. I said that as a non-profit we should be returning the profit to our members rather than just accumulating it. I proposed a fairly small step of distributing just half of the profits - 40% to the members and 10% to the employees, monthly over the following year. That as a member I would rather see another $100 or $400 go into my account rather than being a part of increasing "credit union reserves". Credit unions, which are not taxed, are in competition with banks, which are taxed.

3. a local church - in my years of looking at church budgets, I have yet to see a church that makes a profit or has accumulating reserves. Which does not mean that such churches do not exist, but I have not seen one. Churches do, often, have massive amounts of property. Even if small towns they have buildings which are worth more than many store buildings or local homes. My bookstore was in a building that I bought for $35,000 (and sold for $37,000). My current house also cost me $35,000. Churches in those towns owned buildings worth hundreds of thousands of dollars and, in one case, also owned two houses, which they first used one as a youth building, but later for the assistant pastor, and the pastor's house was owned by the church. Many churches have gone away from the "Manse" system, because pastors a) wanted to pick their own houses, and b) wanted to make gains from real estate.

In this town, a church a few blocks from me, owns a church building, an annex across the street, a parking lot across another street and also bought the old high school which was next door to them (which ended up costing a lot of money, as they had to tear it down because of asbestos concerns, but they still own the lot which they may build on or pave for more parking. So even though they may not make a profit, they do accumulate property and other forms of wealth - church organs, a set of hand bells, carpets, massive air conditioners, etc.

In some ways, I consider this to be disgraceful. Consider the air conditioning. Should the church spend $10,000 on air conditioning ever year or use that money to help the poor? Granted, in this climate, it would be beastly hot without AC. I certainly use it at home. However, I can guarantee you, that at one time people went to church right in this town and that church had no air conditioning. I our ancestors could do it, then why can't we? (But they had no AC in their cars/buggies or in their homes either.) In pragmatic terms, if the church did not have AC, then it would lose members to other churches that did. Yet these members, if they claim to follow the two commandments would claim that they "love and serve God" and also that they "love and serve humanity", but where the rubber meets the road, would put their own comfort ahead of such service.

But that has nothing to do with taxes. In a business, things like hand-bells or air conditioning would be fully deductible expenses, and the average church has very little profit, in my experience, although pastors often make pretty good money too - by my standards where $50,000 a year is a very good job.

Now some mega churches, like Hagee's can bring in tons of dough by going on TV. Hagee makes over a million dollars a year, and his church probably has tons of property too. Hagee, however, does have to pay income tax on his salary. If the church had to pay corporate taxes, they could perhaps legally hide that money by just buying more property.

I'm not sure though. Tax law can be very complicated, much like modern life.