Charitable Argument | News | Salt Lake City | Salt Lake City Weekly

Charitable Argument 

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Ever wonder why your state tax bill is so high compared to other Western states? Blame, in part, Utah’s unique taxation landscape.

We’ve got a high-profile church with vast property and business holdings, but no tax bill. But if you want to keep the church out of the state, keep the state out of the church. We’ve got lots of credit unions that act like banks but will fight to the death before they’re taxed like banks. And we’ve got Intermountain Health Care, a not-for-profit behemoth of hospitals, physician panels and even insurance plans that acts like a for-profit business. It’s also one of the state’s largest private employers. Like its credit union cousins, it, too, will fight to the death before it pays one cent in county, state, property, federal or sales taxes.

Few events this legislative session have been stranger than listening to all the wailing and gnashing of teeth regarding Senate Bill 61, a bill that’s quickly morphed from a proposal to tax 3 percent of the health-care organization’s $2.9 billion in revenue to one requiring it to sell its IHC Health Plans insurance business. Bill sponsor Sen. Michael Waddoups, R-Taylorsville, thought correctly that if an organization with half-million-dollar executive salaries and a virtual lock on Utah’s health-care market acts like a business, it should be taxed as a business. Plus, our overburdened education system sure could use the dinero.

How quickly that idea, along with a House Bill that would have pumped a mere $21 million into teachers’ salaries, died. Critics charged the tax on IHC would unfairly target those using IHC services and redistribute that money to the school system, which everyone uses. Funny how those same critics don’t mind that the larger public, which may or may not use IHC facilities, pays the difference in taxes that IHC has never been obliged or required to pay. Funny how those same critics never mention that IHC’s tax-exempt status lets it apply for government-backed bond funding at reduced interest rates to build its multimillion-dollar hospitals. No wonder competitors have such a hard time getting a foothold. Other stalwart IHC supporters said it’s wrong to tax the sick to pay for our state’s overburdened school system, but our favorite not-for-profit has few qualms about extracting payments from low-income people when they turn sick. If you want medical care at one of the organization’s most celebrated charitable arms, the Fourth Street Clinic, you’ve got to be homeless.

This isn’t the first time IHC has come under the microscope. It won’t be the last. In 2001, a U.S. Tax Court judge ruled that IHC Health Plans operated on a scale larger than is reasonably necessary to accomplish the purposes of the [tax] exempt entities.

Now IHC screams about raising health-care costs if forced to sell its insurance arm. But costs have risen even as IHC’s tax-exempt status has remained intact, and even as IHC offers insurance plans. Waddoups has said that splitting IHC from its insurance business will reveal the organization’s true nature, whether for-profit or not-for-profit. Meanwhile, let IHC earn its tax-exempt status by forming a committee of true community leaders--not just ex-politicians and business types--so its treatment of the low-income and uninsured might be monitored.

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