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Supreme Court Set to Decide Tax Status of Charity Camps

A tax dispute between a Christian Science summer camp and the town of Harrison, Maine, could have far-reaching implications for the tax liability of Jewish organizations across the country.

The dispute, now before the U.S. Supreme Court, stems from a 39-year-old Maine law that allows towns to deny property tax exemptions to charity-run summer camps if most of the youths they serve come from out of state.

The camp was forced to pay $22,000 in property taxes to Harrison because 95 percent of its campers were out-of-state residents.

Lawyers for the camp are challenging the law as unconstitutional discrimination against interstate commerce, while the town has said Maine’s taxpayers should not be required to subsidize campers from other states.

In weighing the case, Camps Newfound-Owatonna Inc. vs. Town of Harrison, the justices will decide whether non-profit groups that mainly serve people from other states should be exempt from paying state and local property taxes.

If the court upholds the Maine law, other states could move to adopt similar statutes. Non-profit organizations serving out-of-state populations, including colleges and a variety of religious and charitable institutions, could in turn be hit with heavy tax burdens.

Such a scenario would prove disastrous for non-profit Jewish groups across the country.

“The budgets of those organizations presume the tax-exempt status of their real estate and other activities,” said Marc Stern, co-director of the legal department of the American Jewish Congress. “Take that away and there would be a huge new burden on Jewish philanthropy.”

Jewish camps could be among the first to feel the impact if the law is upheld.

The camps “don’t operate on particularly great profit margins,” said Mark Pelavin, associate director of the Religious Action Center of Reform Judaism, whose parent organization, the Union of American Hebrew Congregations, runs several Jewish summer camps.

“Something like this would have very serious implications,” Pelavin said, adding that there is “certainly a danger” that some camps could be forced to shut down if they are assessed property taxes.

A number of charitable and non-profit groups, such as the YMCA, United Way, American Council on Education and National Association of Evangelicals have filed friend-of-the-court briefs urging the justices to strike down the statute.

Jewish groups did not sign on, conceding that the case initially escaped their attention.

Although it remains unclear how the court will rule, several justices expressed skepticism about the tax law during arguments earlier this month.

On its face, the law appears to be “discriminatory against interstate commerce,” Justice Sandra Day O’Connor said.

Justice Anthony Kennedy agreed, saying that the law effectively amounted to “discrimination between in-state and out-of-state campers.”

Most Jewish legal observers, meanwhile, said they doubted that the justices would issue a ruling that could effectively cripple much of the non-profit sector.

“It would be a surprise to me if the Supreme Court in its decision were to go so far as to undermine the ability of non-profit groups to participate in the democratic process,” said Craig Sumberg, director of legal affairs for the National Jewish Community Relations Advisory Council.

Of greater concern to Jewish groups is what some see as a change in attitude toward non-profits.

A voter referendum on the ballot in Colorado, for example, would force charitable, religious and non-profit social service organizations in the state to pay property taxes.

The referendum is sponsored by John Murphy, a talk show host who argues that “God is not broke,” but Colorado’s cities are.

Washington, D.C., has also sought additional revenue by proposing to eliminate tax exemptions for non-profit organizations there.

In Congress, Rep. Nancy Johnson (R-Conn.), who chairs the House Ways and Means Committee’s Subcommittee on Oversight, said she plans hearings next year to review all tax exemptions the federal government grants to charity and non- profit groups.

The move follows attempts in the 104th Congress to limit the ability of non- profit agencies that receive federal funds to engage in legislative advocacy.

Taken together, the efforts signal what some observers are calling an attack on the non-profit sector. It may not amount to a nationwide movement at this point, but Jewish activists, for their part, say they will be watching developments carefully.

“There are important and historical reasons for religious organizations being granted tax exemptions,” Pelavin said.

“We still need that same kind of guarantee of religious liberty, and I would hope that the rush to meet the exigencies of today’s budget situation wouldn’t encourage people to chip away at those fundamental protections.”

Meanwhile, the Supreme Court this week declined to hear an appeal of a lower court ruling that allows a New Mexico church to use a city-owned building to show a film about the life of Jesus and to distribute Bibles.

The justices, without comment, turned down arguments that showing the film at senior centers in Albuquerque would violate the constitutional separation of church and state.

Lawyers for the city contended that the centers receive federal money on the grounds that it not be used for religious instruction or worship.

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