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.
