He says,

the President’s tax commission came up with a proposal to reduce tax deductions for some kinds of nonprofit organizations. In my view, that would be a mistake. I have a Tocquevillean sympathy for the proliferation of intermediate institutions which we call American civil society. I think the strength of those institutions enables us to get by with less government intervention than many other developed nations. So in the long run, if we moved to a truly flat tax system that removed the favorable tax treatment for nonprofits, I think we would harm the decentralized production of ideas and art.

Here is the whole interview.

Thanks to, er, Tyler Cowen for the pointer.

UPDATE: In a comment below, Andrew writes,

Today, the federal tax code subsidizes many groups that are questionably charitable at best:

“Nonprofit human services groups receive just 6.5 percent of charity revenue, while scientific research, civil rights, and environmental quality groups receive less than one percent each. In contrast, hospitals and universities, which are not primarily charitable organizations, receive nearly 57 percent of charity revenues.”
tax foundation

Read Andrew’s entire comment. I think Tyler’s position is in difficulty.