Too Many Tax Exempt Groups

A blog about business and economics.
May 10 2013 2:26 PM

There Are Way Too Many Tax-Exempt Nonprofits in America

A tea party activist dressed in Revolution-era garb speaks with an attendee at the Conservative Political Action Conference in National Harbor, Maryland, on March 15, 2013.

Photo by NICHOLAS KAMM/AFP/Getty Images

Let me be clear about two things. One is that IRS officials—as the IRS leadership rightly concede—should not have been subjecting tea party groups to heightened scrutiny during applications for tax-exempt status. The other is that many tax-exempt nonprofits are lovely organizations. I've worked at two over the course of my career, some of my best friends work for tax-exempt nonprofits, my wife works for one now, and in the course of doing my work I'm frequently able to take advantage of the knowledge, expertise, and hard work of people who work at tax-exempt nonprofits.

That said, I mostly take this tea party fracas to illustrate that we have way too many tax-exempt nonprofits in America.


The idea of a tax subsidy for charitable giving makes sense. And to an extent, I think tax subsidies for arts and cultural activities have been a big success in the United States. It's good to have a robust arts sector outside the commercial space, and direct government funding for the arts is likely to be hyperconservative in its tastes. And if charities are tax-exempt and arts and cultural institutions are tax-exempt, then you see the logic for applying it to schools and other educational institutions. And then it's a fine line between education and political advocacy. So next thing you know, you have political advocacy groups all over the country getting tax exemptions.

But it'd really be worth scaling this all back a great deal. A rich guy giving a gift to an elite university that mostly serves the educational needs of rich kids is not particularly worthy of a tax subsidy. That's doubly true when we all know that the "gift" is in some respects a bribe to boost the admissions prospects of his own family members. We don't have a shortage of political advocacy in the United States. God is not going to become angry at us and punish us if our churches become less splendid. Due to the progressive rate structure of the income tax, these tax deductions are very much a way of increasing the social and political clout of the rich and don't seem to inspire a ton of charity in the sense of helping poor people.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Students Aren’t Going to College Football Games as Much Anymore

And schools are getting worried.

160 Countries Host Marches to Demand Action on Climate Change


Blacks Don’t Have a Corporal Punishment Problem

Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 

Why a Sketch of Chelsea Manning Is Stirring Up Controversy

How Worried Should Poland, the Baltic States, and Georgia Be About a Russian Invasion?

Trending News Channel
Sept. 19 2014 1:11 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Sept. 20 2014 11:13 AM -30-
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Tv Club
Sept. 21 2014 1:15 PM The Slate Doctor Who Podcast: Episode 5  A spoiler-filled discussion of "Time Heist."
Brow Beat
Sept. 21 2014 2:00 PM Colin Farrell Will Star in True Detective’s Second Season
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 21 2014 8:00 AM An Astronaut’s Guided Video Tour of Earth
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.