Law

Utah County v. Intermountain Health Care, Inc

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Introduction

Around the world, there are cases where people are unable to access quality care due to the high costs involved. Charity organizations have thus emerged to help increase access to quality care at no extra cost. Such programs are meant to benefit many people across the world. It can be noted that focusing on not-for-profit health care facilities helps resolve the problem of low access to hospitals (Rubin, Singh, & Young, 2015). Every state and the federal government allow for tax exemption for charity organizations including hospitals and other fundraising activities. Property attached to these types of activities are also considered under the tax exemption. In this discussion, the paper looks at the analysis of an argument by the Utah Supreme Court in favor of taxation of the Intermountain Health Care property. The paper will also look at the case of Hospital Utilization Project v Commonwealth the Pennsylvania Supreme Court[footnoteRef:1]. [1: Hospital Utilization Project v. Com., 487 A.2d 1306, 507 Pa. 1, 507 Pa2d 1 (1985).]

Analysis

Property tax exemption for charity organizations has become a hot topic under discussion among many people in the United States. Most of the states find it hard to exempt property from taxation due to the rising number of charity registered property. Most tax bodies would argue that this is a scheme to avoid paying taxes even though some of the buildings are actually used for profit making. For example, in Lancaster City, more than 25% of the property is exempted from taxation[footnoteRef:2]. Such statistics raises an alarm on the issue of property tax since the state governments are unable to collect sufficient revenues from the investments within their areas of jurisdiction. [2: Hospital Utilization Project v. Com., 487 A.2d 1306, 507 Pa. 1, 507 Pa2d 1 (1985).]

In the case of Utah County v. Intermountain Health Care, the supreme court ruled against the hospital base on the fact that the hospitals are supposed to collect charges from patients. [footnoteRef:3]The argument seems harsh since charity organizations are always formed to help the people who do not have the financial capability of attaining the services offered (Rubin, Singh, & Young, 2015). According to statistics, there are about 3 million Americans who are unable to access affordable care (Mangan, 2018). Such individuals are unable to access this service because they are unable to pay for it. The population is unable to pay for insurance premiums that accrue to increase access to the health facilities. [3: Hospital Utilization Project v. Com., 487 A.2d 1306, 507 Pa. 1, 507 Pa2d 1 (1985).]

It is important to note the growing concern on the shrinking tax revenues due to tax exemptions on charitable organizations. In the case of the Hospital Utilization Project v Commonwealth the Pennsylvania Supreme Court, the Pennsylvania Constitution defines pure public charity organizations exempted from taxation as the ones that donate a substantive portion of their service, benefit an indefinite class of person who have been determined to legitimately in need of the charity, operate free from the private profit motive completely, and also relieves the federal and state government of its burden.[footnoteRef:4] [4: Hospital Utilization Project v. Com., 487 A.2d 1306, 507 Pa. 1, 507 Pa2d 1 (1985).]

In this case, it can be determined that one of the factors that may lead to the failure of a case with regards to charity organizations is the exact definition of pure charity. In the case of Utah County v Intermountain Health Care, the hospital is seen to provide the charity service to any individual who visits when in need of the service. The hospital should thus have defined its true definition of charity by providing the service to purely the individuals who need the help. Also, the service that the hospital is providing is commendable and thus the court’s argument on the hospital’s responsibility to collect taxes is not right morally.

Charity organizations have a purpose of helping people in the society. However, some of them are used to solicit funds from donors to be used for different activities. Tax exemption can be seen to reduce the state revenues which affects service delivery in different states (Rubin, Singh, & Young, 2015). For example, if 50% of the buildings in a state are owned by charity organizations, once all of them are exempted from taxation, the government will have a deficit in revenue collection. As a result, the burden of tax will be on the government and on other taxable businesses. Taxes are likely to increase and further creating an economic crisis. The existence of charity organizations within a state will increase the utilization of public resources thus increasing the cost of running the government with low tax revenues.

Conclusion

Property tax is a factor that all governments consider as important in raising revenue. In the case of Utah County v Intermountain Health Care, the supreme court of Utah should have ruled in favor of the hospital with an aim of promoting growth of charity organizations. In this case, the court should have put contingencies for their continued operations. For example, the supreme court should have put a condition where the hospital will need to prove that their service will be provide to the people who indeed need the service. The service can help thousands of people and save many lives in the long run and thus it will be a bad thing if it is stopped because of taxes.

References