e consequences, together with an assessment of their desirability, have not been dealt with extensively in the debate over the tax exempt status of nonprofit hospitals. The development of the contemporary issue of the tax exempt status of nonprofit hospitals demands the reconsideration of the broader issue of the desirable balance of commercial, governmental, and nonprofit participation in the provision of hospital care while preserving desirable social benefits.
Tax exemptions are typically based on one of two premises: the exemption from taxation will promote productivity and general economic activity; or such exemption will create a highly desirable societal benefit (Balk, 1971, p. 20). Charity is considered to be the basis of a societal benefit. Charity, as a basis for tax exemption, must meet specific criteria incorporated into law, including, but not limited to, to whom it is given and the purpose for which it is given.
Tax laws often exclude specific persons, organizations, or types of property from
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