Gov. LePage – separate from his idea to increase the sales tax to offset a reduction in the state income tax – wishes also to eliminate any need to send any portion of state revenue to the cities and towns. His quid pro quo is to give the municipalities the power to tax the real estate of nonprofits in their communities.

The problem with that, quite aside from any issues of fairness in the treatment of the nonprofits, is the fact that it is inequitable. Some communities have nonprofits and others don’t. Some nonprofits have a large amount of real estate but have no ability to pay a tax on it, however it is assessed. And the reassessment problems will be a nightmare.

What would be far more practical and equitable would be to tax the earnings on the endowments of the nonprofits. Of course, only the state could do this, as municipalities have no infrastructure to tax income.

Under this system, only nonprofits with the ability to pay would be taxed. With maybe a $50,000 or $100,000 exemption, small endowments would be spared. The other advantage would be that the state could distribute the tax receipts among all the communities.

A few of our educational nonprofits with their enormous endowments would carry a big percentage of the burden, but they could afford it, and other nonprofits, like land trusts, which use most of their contributions not needed for operating expenses to acquire additional preserves, would feel a minimal impact.

I have not heard this idea put forward before – perhaps because the nonprofits with the huge endowments have a lot of political influence.

Of course, there is one big downside to my plan. If the state is collecting the tax on the income from the endowments of nonprofits, it is perhaps just a matter of time before the state decides it needs to keep all that income stream for itself.

Philip Brooks