The federal government relies primarily on personal and corporate income taxes and payroll taxes. The range of enterprises that falls under the nonprofit organizations like mutual, donative, and commercial enterprises, not all among them qualify...
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...fit surplus were taxable, nonprofits might react by reducing their taxable income in different ways like by lowering fees charged for services provided or increasing staff salaries.
Moreover, the income tax exemption policy can make nonprofit organization more commercial, but the mechanism through which this happens is a subtle one. The Internal Revenue Service issues many odd rules from time to time. The nonprofit organizations appears to have sought out perfectly legal ways of shifting their costs from tax-exempt activities to taxable activities to reduce, if not eliminate, tax liability. However, in some cases the combination of federal tax policies inadvertently solves many problems. Also, on the other hand in some cases the government tax and budget policies increased considerable pressure on the nonprofit organizations to respond to social and economic needs.
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