Tax exemptions on the rocks


Hear that sound? It's the sound of a fragile détente shattering as not-for-profit hospitals face the loss of their tax deduction. Do you think I'm nuts? Maybe, but consider what's happened over the last year or so.

First we had Provena Covenant losing its property tax exemption, and everybody said it was an unusual case. Then Chuck Grassley and like-minded colleagues in the Senate began poring through hospital finances and threatening to impose rules on charity care. Now we have a mayor (Boston's Thomas Menino) going directly after the cash retained by august institutions like Harvard.

I'm telling you, we're about to see some real changes here. I'm not suggesting that not-for-profit hospitals are going to suddenly lose their exemption, but nobody is completely safe. Why? Here's a few reasons:

* Reform is on the way in the person of a new president, and just about everything is on the table.

* Hospitals haven't done the best job of endearing themselves to the neighborhoods they serve--particularly when they've taken a hard line on collections--so there's not going to be a mass outcry if a hospital's exemption gets yanked.

* Despite much evidence to the contrary, too much of the public could easily be led to believe that hospitals are fat cats stuffed with cash, which makes them look like a great target.

* Offering a complete federal income tax exemption, and local property tax exemption, may not even be the best mechanism to fund charitable activity in this day and age. (At least, I'm betting that someone will make that argument.)

But, there's always the chance I'm out of it. What do you think, readers? Is there a chance that not-for-profit hospitals will begin losing their tax exemption en masse over the next few years? - Anne

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