This article considers the nonprofit exemption from the corporate income tax (CIT), which has typically been justified with either subsidy or base-defining reasons. A different rationale is introduced: The corporate tax as applied to for-profit businesses is meant to capture in the tax base income ultimately owned by individuals that might otherwise escape tax, and the nonprofit exemption is a consequence of nonprofit income`s not being attributable to any individual. To explain why nonprofits are exempt from the CIT, scholars should begin by asking why there is a CIT at all rather than by asking what is so special about nonprofits. The argument is then applied to the debate over the rationale for the unrelated business income tax.
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