If you want to cut property taxes without having to cut public services, look no further than your nearest local hospital.
Chances are, hospitals in your community aren’t paying a penny in property taxes, even though they get priority treatment on all sorts of services funded by the property tax, from snowplowing to police.
The tax-exempt status requires a hidden public subsidy on top of already-high hospital rates. Hospitals have a win-win system: they charge high rates and have others cover the cost of the municipal services they depend on.
In Wisconsin, 95 percent of the hospitals are classed not-for-profit, one of the very highest rates in the country. That translates into zero property taxes on their land, buildings and equipment.
Well over $6 billion worth of hospital property is off the property tax rolls, according to a new report from the Institute for Wisconsin’s Future: Hospitable Taxes: How Property Taxes Subsidize Wisconsin’s ‘Non-Profit’ Hospital Industry.
That’s a very conservative estimate, and the total–if assessed today–would likely exceed $20 billion.
Hospitals argue their charitable work justifies their exempt status.
But for-profit companies don’t get a property tax break for their charitable work. Homeowners don’t get a property tax break for charitable donations. Credit unions don’t pay income taxes but do pay property taxes.
Today’s non-profit hospitals operate no differently than for-profit hospitals. CEO salaries at the biggest hospitals are the same as at the biggest corporations.
Shouldn’t hospitals help pay the property taxes that support the public services they depend on?
IWF’s report includes details on 109 non-profit hospitals, including how much they should be paying in local property taxes, and details on how the exemptions affect homeowners in 93 communities. In La Crosse, for example, the owner of a median-priced home is paying an extra $162 a year in property taxes, to subsidize two tax-free hospitals.
At a time of budget crises for local governments across the state, Wisconsin should look for additional sources of revenue, rather than look to cut public services.
Dr. Jack Norman is the research director at Institute for Wisconsin’s Future, a non-partisan policy and research organization in Milwaukee.
