Should Catholic Hospitals Remain Tax Exempt?

Friday, March 19, AD 2010

On the heels of the Catholic Health Association’s endorsement of Obamacare comes another precedent-setting decision affecting Catholic hospitals and other institutions.

The Illinois Supreme Court ruled Thursday that a Catholic hospital in downstate Urbana is not entitled to exemption from local property taxes because, among other things, it failed to devote enough of its resources to charity care of patients:

Provena Covenant Medical Center, one of six hospitals in the Provena Health system, had fought for six years to regain the tax exemption stripped from it in 2003 by a local tax board. Since then the hospital has been paying more than $1 million per year in local property taxes. The case was being watched by Catholic hospitals around the nation because of its precedent setting potential, and the Catholic Health Association intervened in the case.

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7 Responses to Should Catholic Hospitals Remain Tax Exempt?

  • Here is a link to the text of the decision courtesy of Illinipundit.

    http://illinipundit.com/system/files/Provena_107328_Filed_318.pdf

  • Part of me wishes to say chickens meet roost. You want government to run the show in regard to health care? This is a taste of what you can expect, you bloody fools!

    However, I do believe this is an appallingly bad decision from a public policy standpoint. I do not want government micro-managing charities. I especially do not want judges attempting to do it, since they have no expertise outside of the law. I do think that too many non-profits differ little from their for profit brethren, but my concern in that area is outweighed by my fear of government intervention doing long term damage to all charities in this country.

    A great and timely post Elaine.

  • I think you might reduce if not eliminate finicky controversies of this nature if you replaced property and general sales taxes with simple personal income levies as a means of state and local finance. An incorporated entity might still be held responsible for collecting Pigouvian excises, paying tolls and fees for select services (e.g. water provision), and paying excises for their purchases of supplies (of gasoline, for example). Taxes on the net profits of corporations could be limited to those which have a body of owners to which to pay dividends, which would commonly exempt philanthropies.

  • Just recenty we had a chaplin for Ministry for Prisoners to help prepare them for life in the outside world. I was told that they cannot speak about the Gospel to their clients because they recieve money from the Faith Based Initiatives fund.

    This plus the problem of our “Catholic” Colleges and Universities speak loud and clear to me that taking Government money is the Devil’s bargin. But evidently the Hierarchy does not agree.

    Faustina

  • I don’t think that the “Catholicity” problem of our colleges and universities can fairly be laid at the doorstep of government funding. Most such funding actually goes directly to students or is earmarked for specific research, and this funding does not include problematic strings. Catholic primary and high schools also have similar “Catholicity” issues even though they typically receive no government funding at all. This is not to say that government funding does not create risks and problems in some environments, but I think the case against it is more murky and contextual than clearcut.

    As far as tax exemptions go, I do think the public policy of extending such exemptions to non-profit organizations is sensible to the extent such organizations provide servics that reduce the burdens that otherwise fall on government. In such cases, the exemption is not only in the interest of the non-profit, but also in the interest of government.

    But as Faustina suggests non-targeting general funding of a charitable organization by the government does present some legitimate challenges for faith-based charities. The United States Supreme Court has said that faith-based organizations may not use “direct” government support to support “inherently religious” activities. Basically, this means a grantee may not use any part of a direct federal grant to fund religious worship, instruction, or proselytization. Instead, organizations may use government money only to support the non-religious social services that they provide. Therefore, faith-based organizations that receive direct governmental funds must normally take steps to separate, in time or location, their inherently religious activities from the government-funded services that they offer. Such organizations should also carefully account for their use of all government money. This does not mean a charitable organization can’t have religious activities. It simply means it can’t use taxpayer dollars to fund them. Some faith-based organizations set up separate charitable organizations (so-called “501(c)(3) corporations”) to keep programs that receive government money separate from those that engage in inherently religious activities. Whether these encumbrances are inappropriately burdensome on a Catholic non-profits mission depends on the nature of that mission, but in some cases they would be.

  • I guess that is a mistaken impression about the colleges; I remember reading some where about the Land o’Lakes resolution declaring their independence from the Magisterium. They opted to become like secular schools wit lay governance and government grants. Maybe the idea was that the board started to cater to the thinking of politicians who push that grant money.

    The other example I can think of is a person who use to work for the Archdiocese of ….. She said their was nothing Catholic about the local Catholic Charities. This corroborates what I have heard from some other urban Catholics in another city that “on the street” people go to the Catholic church for social services but go elsewhere for the Gospel…

  • That would go along with what I’ve been hearing in a course I’ve been taking. Personal conversion is not important as personal orthodoxy is not important. What is important is right action or orthopraxis. When there is orthopraxis then there will be orthodoxy. Of course orthopraxis gets defined as greater govt. social programs.