A few years ago, officials counted 13,428 tax-exempt properties in Kanawha County. They were churches, parsonages, hospitals, libraries, schools, colleges, charities, government agencies, orphanages, soup kitchens and the like. Altogether, they were valued at $250 million. Had they been taxed, the county government and school system would have received millions in added revenue.
County commissioners ordered a review. Researchers found that 300 of those properties didn’t deserve exemption under West Virginia law. They were put on tax books, bringing in $16 million extra revenue yearly. Hurrah. Well done.
The issue of tax-exemption is tangled. For example, a West Virginia assessor training course tells of a church that declared all its members to be ministers, thus their homes were tax-free parsonages. But this ploy was rejected.
Another example: If a church parking lot sits empty most of the week, it’s exempt from property tax — but not if it’s used for commercial parking during weekdays.
And another: When Charleston’s Sacred Heart CoCathedral purchased the Riverview Terrace apartment complex, valued at $832,800, the apartments weren’t tax-free, because it’s profitable rental property.
Yet another: When St. Francis Hospital was purchased by a for-profit chain, it became taxable — and when it was repurchased by nonprofit Thomas Memorial Hospital, it became tax-exempt again. But county officials said the for-profit owners failed to pay $834,830 property tax for the period when the hospital operated commercially.
Further complication: To boost jobs and prosperity, local governments often grant tax-exemption to new factories or firms. Frequently, the business owners agree to PILOT (payment in lieu of taxes) plans — but sometimes those voluntary payments are forgotten or uncollected.
Back in the 1990s, a Morgantown power plant was declared tax-exempt on grounds that it constituted “a pollution control device” because it disposes of coal waste. Teacher unions sued and forced the plant to pay $1.1 million yearly property tax.
And when Dow Chemical owned its large South Charleston research center, it paid about $700,000 yearly property tax — but when it donated the complex for public use, the revenue was lost.
So many valuable properties have been taken off Kanawha County’s tax books that Commissioner Kent Carper once complained that the county has a “swiss cheese” tax base. For example, he said the Edgewood Summit center for elderly has “no business being characterized as a nonprofit.”
Here and there around America, some leaders want to start taxing nonprofits. Nome, Alaska, proposed collecting property and sales revenue from churches — but the notion was voted down two months ago.
Republican Gov. Paul LePage wants Maine to tax all nonprofits except churches and government agencies. He says those agencies are part of communities and should pay their fair share.
Sociologist Ryan Cragun of the University of Tampa estimates that U.S. churches alone elude $83 billion yearly in taxes. This includes $71 billion in uncollected property and sales tax, plus $12 billion that parishioners write off their income tax returns for church donations.
Of course, donations should remain tax-exempt. Otherwise, charities would disintegrate. But property taxes, especially, are different.
Too much tax giveaway is occurring. West Virginia legislators should study this confusing mess and decide whether some entities now getting free rides should be compelled to pay their fair share like everyone else.