Property tax exemptions: Headed for extinction?

D. A. Hyman, T. J. McCarthy

Research output: Contribution to journalArticlepeer-review


Hospitals face an assault on property tax exemptions that threatens the foundations of all voluntary not-for-profit facilities. The Utah Supreme Court fired the first salvo in this campaign in 1985 in Utah County v. Intermountain Health Care, Inc. The court examined the distinctions between not-for-profit and for-profit hospitals, the extent to which the two hospitals involved were supported by donations and gifts, the 'profit' derived from operation, the charges levied on patients, the level of charity care provided, and several other factors before concluding that the hospitals did not qualify as charitable institutions. Since then, efforts at taxing hospitals have grown dramatically. The definition of 'charitable' is at the heart of the tax-exemption problem. Charitable is a legal 'term of art,' which encompasses far more than the simple provision of charity care. the promotion of health is a charitable purpose. Hospitals qualify under the Internal Revenue Code for tax-exempt status because they promote health-not because they provide charity care. Yet all hospitals promote health. What, then, differentiates not-for-profit from for-profit hospitals that justifies a tax exemption. The argument for continued exemption must be made, if at all, on the basis of the community benefit the not-for-profit provides. Charitable institutions exist to serve and benefit the community and to provide an avenue for voluntary association. They help to improve and promote the general welfare through education, religion, and culture. The real benefits of a not-for-profit entity are found in the fulfillment of these concepts.

Original languageEnglish (US)
Pages (from-to)32-36
Number of pages5
JournalHealth Progress
Issue number11
StatePublished - 1988

ASJC Scopus subject areas

  • Medicine(all)


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