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Ill. high court hears arguments over whether nonprofit hospitals should lose their tax exemptions

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Hospital officials and municipal leaders have been arguing before the Illinois Supreme Court about whether letting not-for-profit hospitals avoid paying property taxes  is constitutional. Most of Illinois’s hospitals are officially not-for-profit.

That lets them be exempt from having to pay a total of hundreds of millions of dollars in property taxes each year as long as the value of their charitable services is measured as equal to or exceeding their estimated tax liabilities. Officials of not-for-profit hospital have always asserted that they need those exemptions  to help them meet their communities’ healthcare needs, including treating indigent patients.

However, an  increasing number of  municipalities argue that many not-for-profit hospitals are more like businesses, making big profits, which show up as, for example, huge salaries for senior executives.  A 2009 report by the Center for Tax and Budget Accountability said that 47 Chicago-area not-for-profit hospitals had property-tax exemptions worth a total of $279 million a year back then.

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