Tennessee Questions Tax Subsidies to YMCA

December 27, 2005

Are YMCAs really any different from for-profit health clubs they compete with? In our recent Special Report on the charitable tax deduction we argue that they aren’t, making a subsidy to them at taxpayer expense hard to justify.

Apparently the Tennessee state appeals courts agrees, as it’s threatening the yank away YMCA’s tax exemption on the grounds that it gives them an unfair competitive advantage over similar for-profit health clubs. From WREG in Nashville:

NASHVILLE, Tenn. The Y-M-C-A of Middle Tennessee is trying to retain it’s tax-exempt status.

But the state appeals court has ruled for the nonprofit to do so, it must first prove that children are allowed to use its Uptown Nashville facility.

The Y-M-C-A has been involved in a nine-year battle with a group of private health clubs who say the Y-M-C-A’s state tax exemption gives the organization an unfair advantage in competing for members.

State law says that a family wellness center must be accessible to people of all ages to be tax-exempt. (Full story here.)

For more on the case for scaling-back federal income tax subsidies to 501(c)(3) nonprofits, see here, here, here, here, here and here.


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