Taxation Will Increase Health Care Costs
Posted By: Jason Vander Weele 
Date Posted: April 7th, 2010 Category: Cost & Quality
I think that some people fail to see the real impact that taxation on non-profit organizations can have.
I am referring to the article: http://www.stltoday.com/stltoday/news/stories.nsf/stlouiscitycounty/story/9F3DB4701FB3A495862576FE000A93D1?OpenDocument
Non-profits are as such because there are no shareholders making profit from the operations of the organization. Non-profits exist as a way to continually grow the services of the organization, and provide those services to the community. To impose or increase taxes on non-profits will have negative impacts on the supply and demand curves of those services. They will become more expensive to provide, and cost more to receive. It adds a burden to the community.
The real issue here is that non-profits will cease to exist if they can not continue to provide services at cost. If you increase those costs in St. Louis City (by imposing taxes), it would provide incentive for people to request services in other jurisdictions where cost is less (St. Louis County, St. Charles County). And, St. Louis City would lose the money that would have been generated by the 1% earnings tax for the employees who would have worked in the city had a tax not been imposed, the tax collected on a patient’s family from a restaurant visit would go to another municipality, etc. Imposing a tax like this does indeed have a ripple effect on the entire community, as stated in the article.
There are many solutions to this problem, other than taxing non-profits. Lowering the operating cost of our government (combine offices and number of elected positions), cut the service hours for government offices, ask elected officials to donate money they have raised for their elections to the taxpayer – wouldn’t we all really love to see this happen?, or simply cut services. I don’t want to get off-topic, as those are just a few suggestions of other options.
I’ve worked for non-profits since I was 21. All of them have provided a whole lot more to the community than they have sucked out of the community. This movement shows me that our elected officials truly do not understand the level of contribution provided to the community by non-profits, or employees of non-profits. I suppose many of them come from the corporate world, where doing something for nothing is not acceptable.
Comment By: Rebekah
Date & Time: April 16, 2010 at 12:20 pm
As always, an excellent post, Jason.
I saw that article in STLToday when it was first published and I too wondered what the implications would be for hospitals and healthcare costs. This is a nice, concise explanation.
Who do we write to to put the kibosh on something like this?
Comment By: Jason Vander Weele
Date & Time: April 22, 2010 at 10:48 am
Rebekah, thanks for compliment.
I would suggest writing the local Board of Alderman. Depending on where you live, the contact info can be found at http://stlcin.missouri.org/alderman/ald.cfm
I did write my alderwoman about this issue. The response I received was, "It is not a tax…" and "Public safety services cost real dollars. How do you propose to pay for the cost of service?"
I responded that I considered this to be a tax, because it is asking for money to fund the government, and that taxing groups that already provide free or low-cost services isn't the way to raise money. I then looked through the city budget, and provided a list of ideas for how the city could cut that budget, to reduce the expenses. While I think it is important to fund police and fire services, I think there are always other departments that are much less of a necessity, and could spare a 10% cut, or at least be forced to figure out where their inefficiencies are and reduce cost of performing.
In summary, if the city wants to help Make Medicine Better, they shouldn't rely on taxing the not-for-profit organizations that are working toward that mission. There are many companies in this city whose profits go to shareholders living in California, China, Saudi Arabia, and elsewhere. Those are the organizations that should be taxed. The money received by nonprofits in this community goes right back into this community, and thus is already helping this community.