Taxing “Nonprofit” Health Care Providers – Is the Time Now?

I represent retailers and other taxpayers across the state challenging their property taxes. The municipalities hire lawyers to defend them in court, and political figures speak out in the court of public opinion against them. They are often chastised for exercising their constitutional and statutory rights to challenge their taxes. Every taxpayer has these same fundamental rights. When those taxpayer challenges upset the status quo, you see “dark store” referendums across the state and proposed legislation designed to make their taxpayer challenges procedurally and substantively more difficult. The common refrain along the way is that these taxpayers are “not paying their fair share” and are “causing other taxpayers to have to pay more.” But who is really to blame?

In the words of Jules Winnfield from Pulp Fiction: Well allow me to retort.

I came across a New York Times article that once again pointed out the inequality in the property taxation system coming from nonprofit property tax exemptions. Are the “nonprofits” in your community paying their fair share? Are they true “nonprofits” that deserve to be protected and exempted from property taxes in the state?    

In news conferences, public statements, and speeches, you hear political figures complain of the amount of public services that retailers and other taxpayers use as justification for treating them differently in the eyes of the law. But one would ask why are these municipalities who are so inclined to fight and deny taxpayers a fair and simple valuation of their property willing to turn a blind eye to “nonprofits” who use all of the same services as other taxpayers do? Not only are these “nonprofits” using these services often at a much higher volume than other taxpayers, but they are also often exempted from property taxes because of the policy reasons. 

As the New York Times article notes, in “Milwaukee, for example, a nonprofit children’s hospital has sued 1,101 patients since the beginning of 2018 – more cases than it brought in the entire previous decade.”

These are nonprofits with revenue in the hundreds of millions if not billions, depending on the entity. And they are suing patients to collect medical debts and garnishing their wages. Of course, they are entitled to seek collection under the law as it stands. Should billion-dollar nonprofit entities suing patients and garnishing patients in the community be given a free pass as to their property taxes? These are multi-billion-dollar entities that are some of the largest employers in the state. Why aren’t community and political leaders seeking to make them pay their “fair share?” Or challenging them to abandon these collection actions? Is what they are providing to the community worth it?   

I’m not the only one asking this question. They are asking this question in Chicago as well. In a recent article from Modern Healthcare, it cites a Center for Tax Budget and Accountability 2009 report that estimated the local property tax exemption cost the community about $280 million annually for the 47 non-profit hospitals in the Chicago metropolitan area. 

The question should be asked as to whether these nonprofit entities that have become such economic powerhouses within Wisconsin should do more – and pay more?   

What we find is that instead of these political leaders taking on the systematic problems in the tax system that allow these nonprofits to avoid paying property taxes almost entirely, they focus on nibbling around the changes at the edges of the system against more popular political targets: large business retailers. While there is a political expediency to that, it will neither solve the systematic problem of their budget shortfalls nor reform the fundamentally unfair structure that currently exists. For everyone to “pay their fair share” – everyone must – including these nonprofit powerhouses.

Victor Hugo said “[B]eing good is easy, what is difficult is being just.”  It is time for people to focus on reforming our property tax system to become more just rather than more popular.

The attorneys of Gimbel, Reilly, Guerin & Brown, LLP can answer your questions about property tax assessment in Wisconsin. Contact our Milwaukee property tax lawyers today at 414-271-1440.

Sources:

With Medical Bills Skyrocketing, More Hospitals Are Suing for Payment: https://www.nytimes.com/2019/11/08/us/hospitals-lawsuits-medical-debt.html?smid=nytcore-ios-share

Chicago not-for-profit hospitals forced to defend hundreds of millions in property tax breaks: https://www.modernhealthcare.com/not-profit-hospitals/chicago-not-profit-hospitals-forced-defend-hundreds-millions-property-tax