The Tricky Business of "Taxing" Non-Profits

Payments in lieu of taxes (PILOTs) are a popular new way for cash-strapped cities to add to their revenue by swapping voluntary payments from nonprofits for property taxes. The Lincoln Institute of Land Policy evaluates this novel practice.

Daphne A. Kenyon and Adam H. Langley, authors of the study, say that at least 117 municipalities have tried out a PILOT program since 2000.

Do PILOTs work? Kenyon and Langley conclude that yes, but it depends:

PILOTs "...have the potential to provide crucial revenue for municipalities that have a significant share of total property value owned by tax-exempt nonprofits, both as a stop-gap in the current municipal fiscal crisis and in the future. However, PILOTs rarely account for more than 1 or 2 percent of municipal revenues, so expecting these payments to eliminate local government deficits is unrealistic."

Full Story: The Municipal Fiscal Crisis and Payments in Lieu of Taxes by Nonprofits

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