In a recent post-election interview, Gov. LePage stated that Maine nonprofits “don’t pay their share” and that “they are takers, not givers.” This statement is misleading and untrue, and feeds a public perception that’s just not based on the facts.

It also maligns a sector comprised of highly valued organizations such as veterans groups, domestic violence prevention programs, churches, museums and theaters, hospitals, economic development organizations, educational institutions, land trusts, social service agencies, environmental organizations and many others that not only play a significant economic role in Maine, but also enhance our quality of life.

The Maine nonprofit sector contributes 18.9 percent of the state’s gross product, employs more than 84,000 of its residents, pays more than $3.6 billion in wages that support families and businesses throughout Maine and contributes over $10 billion to the Maine economy.

Nonprofit employers pay Social Security and Medicare taxes on the compensation they pay their employees, and their employees pay state and federal income and Social Security taxes on these earnings, as well as Medicare and unemployment taxes in most cases.

These employees use their earnings to buy goods, on which they pay state sales tax, and homes, on which they pay local real estate taxes. In these ways, most of the income passing through the nonprofit sector is and has already been taxed. In addition, most nonprofits are not exempt from sales tax, and pay a state sales tax on any purchases they make.

Since the governor’s remarks were most likely aimed at the tax exemptions that nonprofits do receive, let’s examine those as well.

The history of tax exemption for charitable nonprofits dates to medieval England. Additionally, when federal income taxes were first imposed in the United States a century ago, nonprofits were excluded – and Congress didn’t even debate the issue.

Here are some of the reasons why:

• Nonprofit efforts aid the people and communities they serve, rather than advancing the personal ends of individuals. Thus, profits do not flow to owners or stockholders.

• Nonprofits contribute to the tax base by spending donated dollars and coordinating volunteer services in their communities. They reduce the burden on government, thus avoiding the need for higher taxes.

• The nonprofit sector is primarily a service sector, which is, by its nature, people-intensive, both with volunteers and staff. The largest share of most nonprofit budgets is devoted to compensating employees (i.e., individual taxpayers), and that compensation is all subject to taxation.

• Imposing taxes on nonprofits would divert funds from the delivery of vital services.

It also bears noting that many nonprofits already make payments in lieu of property taxes to their communities in order to help defray the costs of police, fire and other services. In addition, they support and enhance their communities by opening their facilities to community members and providing free services for citizens.

Nonprofits are also critically important partners in carrying out the work that is the responsibility of government. These kinds of partnerships center on working together toward the common good (“charitable purposes”), and are not merely a contractual, exchange-of-funding kind of relationship. As a result, our society has granted nonprofits the status as tax-exempt entities, and this exemption from taxation is good economic and social policy.

An interesting counterpoint to the governor’s recent comment came from the governor himself just a few weeks ago, when he responded to our candidate questionnaire regarding his personal and professional experiences with nonprofit organizations.

The governor stated during the campaign that he had been involved in multiple nonprofits, and he went on to say, “The work that nonprofits do in Maine is critical. These nonprofit organizations are comprised of amazing volunteers, supporters and staff that provide exceptional services and programs to the people of Maine.”

This makes his recent statement even more perplexing, as the two statements appear to be in conflict with one another.

So, as a representative of the nonprofit sector in Maine, we would like to request that the governor consider the damage that sweeping statements like the one he made after the election can have on the public perception of Maine’s nonprofit sector – which is composed of organizations that he also professes to value and admire.

This kind of statement unfairly categorizes a sector that plays a huge role economically, while also enhancing quality of life of all Maine residents. It also denigrates the 150,000 employees and volunteer board members who commit their time and talents to work that supports the values and ideals that Maine residents hold dear.

— Special to the Press Herald

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