Hocking the Halo: Implications of the Charities' Winning Briefs in Camps Newfound/Owatonna, Inc.Exempt Organization Tax Review (1998)
AbstractIn Camps Newfound/Owatonna, the petitioner charity – with important assistance from friends-of-the-court charities – persuaded the Supreme Court to overturn a Maine statute that granted property tax exemption only to those charities primarily serving state residents. Camps Newfound/Owatonna, Inc. v. Town of Harrison, 117 S. Ct. 1590 (1997). Given this statute's facial discrimination, why was victory a 5-4 squeaker? The charities naturally reasoned that coming within the Commerce Clause requires proving that charities engage in commerce (particularly interstate commerce). In their focus on the financial impact of the discriminatory statute, however, the charities never offered a positive construct of property-tax exemption that ignores the residency of the charity's beneficiaries. The charities' omission left them vulnerable to an attractive articulation of property-tax exemption, whose very definition limit-ed exemption to charities serving state residents. The charities might have achieved a short-run tactical victory at the cost of their long-term strategic interests. Once they decided to participate in the Camps Newfound litigation, the amici charities had no choice but to cast their activity in as commercial a form as possible. Dropping the pretense that charity is not 'big business' might simply declare what all could see if they would only look. However, the strategy of the charities in Camps Newfound might encourage society to rethink its favorable view of the charitable sector. The Supreme Court suggested that the Constitution would not prevent a state from repealing charitable tax exemptions and using state resources instead to pay direct subsidies to residents. As improbable as this result sounds, the very argument made by the charities in Camps Newfound that the charitable sector engages in commerce 'just like the big boys' jeopardizes the special protected view of charities, making society more willing to reconsider public subsidies long taken for granted by charities.
Publication DateMarch, 1998
Citation InformationHocking the Halo: Implications of the Charities' Winning Briefs in Camps Newfound/Owatonna, Inc., 20 Exempt Organization Tax Review 31 (1998).