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The Exemption of Nonprofit Organizations from Federal Income Taxation (with Rahdert). 85 Yale Law Journal 299 (1976)


The practice of exempting charitable and religious organizations,
mutual benefit groups, and a variety of other nonprofit associations
from federal income taxation has persisted, with surprising consistency
despite minor variations in coverage, for many years. With roots
reaching back to the British Statute of Charitable Uses of 1601 and to
early state constitutional provisions,' most of today's exemptions from
income taxation date from the Revenue Act of 1894 and were reenacted
in the corporation income tax of 1909 and the Revenue Act
of 1913. But neither upon their initial enactment nor during the
ensuing decades have these exemptions elicited more than cursory
legislative explanation, save for matters of technical detail. Commentators
have been almost equally silent. These decades of benign neglect
may have reflected a conviction that the wisdom of tax exemption
was self-evident, that the basic policy was politically invulnerable
to change, or that taxation in this area would bring in little revenue.
But there have been several departures from this legislative tolerance
in recent years. This change in attitude, in our view, amply warrants
a re-examination of a policy long accepted almost without question.

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