ABSTRACT
Exempting charities from various forms of taxation is a practice that appears as old as western civilization itself. The long history of the charitable exemption has made it a virtually immutable part of the tax laws—so much so that the thought of taxing charitable organizations on the same basis as profit-making enterprises seems contrary to nature. The exempt sector as a whole is very large and growing rapidly. Burton Weisbrod notes that nonprofits "engage in hundreds of distinct activities; they are growing at the rate of thousands per year; they employ millions of workers; and they have hundreds of billions of dollars of annual revenues and assets." Many communities have begun asking for voluntary payments to reimburse the community for lost tax revenues. In addition, taxing authorities at both levels have become ever more aggressive in challenging the exempt status of a variety of organizations, including adoption agencies, private schools, arts organizations and nursing homes.
