What the Illinois Push to Tax Hospitals Means for Independent Schools

This story from Bloomberg Business may be a harbinger of the future, especially since nearly every state and municipality in the U.S. is close to broke.  It appears that the State of Illinois is denying the longstanding property tax-exempt status of not-for-profit hospitals, and the move has school districts and other taxing authorities salivating over the prospective windfall.  

This will no doubt end up in court, with an appeal at some point to the U.S. Supreme Court likely, but if upheld it would set a powerful precedent for states to tax virtually all nonprofit assets.  One likely resolution would be to affirm property tax exemptions for institutions serving indigent people, while allowing taxation, perhaps via a prorated formula, on institutions that serve more affluent people (think independent schools).

Other than carefully monitoring the Illinois situation, as well as any similar moves in your states, this seems like a perfect moment to call for independent schools to figure out how they make their communities better places.  A tension between the private/public benefit sides of independent education has always been present, but the property tax question may make it a survival imperative that we better define our public purpose.