> Charities pay the same price for phone service, postage, salaries, rent etc. Yet we’d have a complex infrastructure for deciding if they should get a break on one line item, taxes. Sawing off that whole infrastructure would simplify things greatly.
I mean, they often don't pay the same prices. Recognized organizations often have a lower price option for many services. Landlords often charge below market rent to charities. Utilities often have a lower tariff for charities. Charities may not have to pay sales tax, so the goods they need are less expensive (yeah, that's another tax, but). Nonprofit Mail is printed material eligible to be mailed as USPS Marketing Mail® at significantly reduced nonprofit postage rates. [1]
Salaries sure, except there's a good amount of people who will work for less or free, if it's for a charity they find compelling.
Qualifying for the break on income taxes drives the discounts on all the other things.
From a 10000 foot view, the non-profit designation is the way the government says "the tax we'd get from you, and your cost to file the paperwork, is not as valuable as what you provide, so we'll skip it."
It's one of the available "force multipliers" that the government has to try to "cost X but do Y" - just like backstopping loans, etc.
It does distort the "market" - that's the whole point.
Actually non-profits to have file just as much annual paperwork as a regular tax return, plus getting the status takes a long time and involves a lot of paperwork too.
And if they aren’t making a profit they aren’t paying taxes, regardless of filing status.
I mean, they often don't pay the same prices. Recognized organizations often have a lower price option for many services. Landlords often charge below market rent to charities. Utilities often have a lower tariff for charities. Charities may not have to pay sales tax, so the goods they need are less expensive (yeah, that's another tax, but). Nonprofit Mail is printed material eligible to be mailed as USPS Marketing Mail® at significantly reduced nonprofit postage rates. [1]
Salaries sure, except there's a good amount of people who will work for less or free, if it's for a charity they find compelling.
Qualifying for the break on income taxes drives the discounts on all the other things.
[1] https://faq.usps.com/s/article/What-is-Nonprofit-Mail