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A Veil of Tax Exemption?: A Proposal for the Continuation of Federal Tax-Exempt Status for 'Nonprofit' Hospitals

47 Pages Posted: 16 Apr 2011 Last revised: 24 Apr 2015

Jeremy J. Schirra

Case Western Reserve University School of Law

Abstract

Nonprofit, or tax-exempt, hospitals have been increasingly scrutinized in recent decades by the American public and government officials due to their tax exemption. A majority of this criticism stems from the notion that these hospitals are providing community benefits that are significantly less than the value of their tax exemption. It would be ill-conceived to simply cease the tax exemption extended to hospitals due to the potential dire repercussions. Rather than considering the cessation of hospital tax exemption, the standard by which tax-exempt hospitals qualify for their exempt status should be changed from the current community benefit standard to a measured community benefit standard. Adopting the measured community benefit standard described would improve the quality and quantity of benefits provided, increase public transparency as far as the amount and nature of community benefits procured, augment hospital autonomy, and incentivize hospitals to provide benefits in new ways.

Keywords: Nonprofit, hospital, taxation, tax, 501(c)(3), exemption, federal, PPACA, community benefit standard, tax-exempt, nonprofit

JEL Classification: K34, L31, L3, H51, I18, K32

Suggested Citation

Schirra, Jeremy J., A Veil of Tax Exemption?: A Proposal for the Continuation of Federal Tax-Exempt Status for 'Nonprofit' Hospitals. Health Matrix: Journal of Law-Medicine, Vol. 21, p. 231, 2011. Available at SSRN: https://ssrn.com/abstract=1592663

Jeremy J. Schirra (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States

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