To Tax or Not To Tax Is Not The Question, But How?

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March 15, 2011; Source: | Like many local governments struggling to overcome their fiscal woes, New Orleans has begun to ask if it still can afford to exempt private schools and universities, churches, charities and other nonprofit organizations from property taxes. Findings from a study released this week, and conducted for Mayor Mitch Landrieu's Tax Fairness Commission, suggests that New Orleans will “ultimately require a significant contribution from properties that are off the tax roll," noting that these same groups and organizations benefit from taxpayer-financed services. reports that the Bureau of Governmental Research calculated for its study that “43 percent of the total assessed value of property in Orleans Parish is exempt from taxation, with nearly one-quarter of the exempt property escaping taxes because it is owned by nonprofit groups.”

The report also includes several ways New Orleans could collect revenues from tax-exempt entities. According to, they are: “eliminating the nonprofit exemption entirely, tightening the eligibility requirements, taxing nonprofit groups at a reduced rate or – the likeliest option – imposing specified service charges instead of taxes on nonprofits' property.”

Voluntary payments in lieu of taxes isn’t one of the recommendations because, as the report said, few organizations are likely to take part in such a plan. Of all the recommended options, the report concludes that "the most practical approach to solving the revenue and fairness problems” would be to implement special service fees.

One reason that idea is attractive is that New Orleans could enact them without state approval or amending the Louisiana constitution, as some other changes would require. An example is a drainage fee or street maintenance charge that could raise significant revenue to meet local needs. The report also says that approach would result in a city-wide sharing of the cost of essential services "more fairly than is currently the case."—Bruce Trachtenberg

  • James Charles

    But don’t these organizations that “benefit from taxpayer-financed services” also provide significant benefit to the taxpayers? Would this violate the Free Exercise clause if applied to Churches?