The Coming Disruption to the Sector

The result is likely to lead to efforts to overturn the tax code governing charitable donations. Such efforts have been on the table for quite some time. Mainly the Senate Finance Committee, about every time a fiscal conservative is chairing the committee, would question why an institution, namely hospitals, academia mainly, but never a church, enjoys tax free status.

Until recently, interest groups were strong enough to step in an divert any efforts to increase taxes on a group or institution. Now it seems all bets are off. Even the auto industry has a difficult time diverting the start dates for tariffs.

If some well-meaning elected official made the declaration tomorrow that we need to start taxing charitable institutions, it’s hard to think that such efforts may not come to fruition. Sure, it’s hard to argue that you should tax a non-profit hospital. But what seemed impossible yesterday in some ways seems entirely possible now.

The argument for taxing such an entity would likely not focus on the increase in tax dollars that would go to the government, but rather the argument would apply the prevailing logic of today, that being one of ‘we looked at the dataset, and we can’t tell where money is going…we don’t know what the impact is…surely someone must be getting a kickback somewhere…and therefore it should be stopped immediately.’ Yes, hospitals have patient numbers and datasets of procedures, but will that matter to skeptical voices?

This view is essentially the view adopted by Elon Musk’s DOGE taskforce. Whether they are wrong or right may not matter. What matters is they are there and they can’t find ready answers to their most basic questions, such as ‘where is the money going, how is it being used and who is the ultimate beneficiary?’ If the sector as a whole struggles to answer questions such as these it could be under the microscope. The government will likely only continue to leave no stone unturned in their quest to replace tax revenue.