Thats just an argument that Non-profits should exist.

I think this misunderstands that the entire point of having a non-profit tax status is to create a tax dodge.

We want them to avoid taxes because we want to promote the products they generate.

>If they make millions or billions from licensing to HBO then they don’t pay taxes on that. They can also distribute those gains to employees and management in the form of bonuses or featherbedding.

Why should we care that they don't pay taxes? If they give it to employees, then they have to pay income tax at a much higher rate than a for profit would.

At the end of the day, the public wanted high quality educational content produced, we set up tax incentives to support it, and the content was made.

> Why should we care that they don't pay taxes? If they give it to employees, then they have to pay income tax at a much higher rate than a for profit would.

Can you provide a source for this? I'm not finding anything that suggests that an employee of a non-profit organization would be taxed at a higher rate than an employee of a for-profit organization.

That's not what I'm saying. I'm saying that lavish employe salaries are taxed more than for profit corporate profits.

But isn’t than an argument for not having corporations pay taxes? Or for letting revenue to corporations be tax deductible for consumers?

Why should the Sesame Street production company get tax benefits over any Hollywood production?

For profit companies can and do deduct employee taxes as a cost of business before calculating their corporate tax liability.

>Why should the Sesame Street production company get tax benefits over any Hollywood production?

Specifically because we decided as a society that we wanted to encourage companies making educational content and not Hollywood blockbusters.

There are strings attached to being a nonprofit. These include limits on employee compensation so that the CEO of a nonprofit can't take a billion dollar salary as a workaround for corporate profit. They have to be paid a salary that the IRS thinks is reasonable, and any excess Revenue made by the nonprofit has to go back into its beneficial purpose

Employee salaries and benefits (costs generally) not employee taxes.

But agree in general. US 501c3 status is based on a variety of things that the federal government has determined are worth encouraging--including education--that it has historically deemed the private sector was not sufficiently interested in funding. This in turn comes with strings. Which is not to say there aren't large and wealthy institutions that benefit from this status or that donors to those organizations don't benefit as well from certain tax benefits such as donating appreciated assets.

>Employee salaries and benefits (costs generally) not employee taxes.

Can you sign elaborate because I'm generally curious. I run a business and and my portion of employment taxes, and all of salary including their taxes, are discounted before corporate profit and taxes are calculated.

If this were not the case, I would be paying taxes while my bottom line is negative

I was thinking of the taxes that the employees pay. You're of course correct that employee costs--including salary, benefits, and the portion of their employment tax that the business pays are tax deductible business expenses.