American Experience with Tax Law: Transparency of Foundation Hospital and Its Fulfillment of Social Accountability
Chang Gung Memorial Hospital have recently encountered a series of crisis, first with the power struggle of board chair ship, followed by collective resign of physicians working in emergency unit amid other disputes. Those incidents invite outbursts of a wave of public opinions that fiercely criticize the way this hospital manages the operation of its medical service, which pursues cost-benefit principle. Since foundation hospitals are non-profit organizations that enjoy tax exemption status, they are legally required to behave and act to serve public interest. But in reality they are short of actions to fulfill this mission. Therefore, major reform as to the hospital governance and public surveillance has policy urgency. The American experience in keeping hospitals who enjoy tax benefit in line with public interest is mainly through tax policy. Hospitals that want to enjoy tax benefit are required to follow the regulations set by the Internal Revenue Service. As long as hospitals meet community benefit test, they can have tax favor. In recently years, IRS strengthened the obligations required of hospitals when they fill out the tax form specifically designed to suit this purpose. The experience of using tax mechanism to advance public interest should ring a bell to Taiwan’s policy makers.