Let's tax all the universities and hospitals!

kennedy said:
I wish they were all still in the Back Bay, that would be so much better...well, actually I just wish Harvard was in Boston proper. MIT looks good on it's side of the river.
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Although it will never be official, Harvard owns more land in Boston than it does in Cambridge. I know what you mean though architecturally.
 
From WBUR:
Boston Nonprofits Wrestle With City Demand For Cash Payments

By CURT NICKISCH

BOSTON ? The City of Boston has been mailing voluntary property tax bills to major hospitals, universities and museums. As nonprofits, they don?t have to pay taxes, but Boston Mayor Thomas Menino says they should. He is asking them to pay a quarter of what they?d have to pay if they were taxable institutions.

WBUR?s Business and Technology Reporter Curt Nickisch spoke about the issue with All Things Considered host Sacha Pfeiffer.

Sacha Pfeiffer: It?s not new that Boston has been pushing nonprofits for years to pony up voluntary payments. But why is the Menino Administration upping the ante by sending out voluntary property tax bills now?

Curt Nickisch: Boston?s certainly not alone. Municipalities everywhere are trying to fork more money into their coffers during tight times. There are about 80 in Massachusetts that also have similar arrangements, and a growing number of Bay State communities are moving closer to voluntary payments lately, such as Marion, Dartmouth and New Bedford. But Menino?s gone the furthest by trying to practically make the new standard 25 percent of what a for-profit would be paying.

Why don?t nonprofits don?t pay taxes?

It?s law today that nonprofits are tax-exempt ? the allowance is even in the Massachusetts Constitution. The historical argument for the exemption is that they are doing important social services that the government does in other countries, things like educating citizens, giving health care to people who can?t pay, funding arts and culture. And that?s why they have a special place in tax law.


But looking at the list of the 40-odd institutions, I don?t see churches on here or tiny arts organizations. It?s basically big hospitals and universities and the biggest, high-profile museums.

Right, no soup kitchens in there. It?s because Menino?s going after the deeper pockets. It belies his political bent, because it?s more popular to go after perceived rich institutions with big endowments than it would to go after your neighborhood church. Even though if you follow the logic ? that nonprofits are getting the benefit of city protections like fire and police service for free ? that obviously applies to small nonprofits, too.

It?s interesting that different institutions are reacting differently to this pressure. Boston University for instance is voluntarily paying more than $5 million this year. Meanwhile, Boston College, right up Commonwealth Avenue, is paying less than $300,000. Others, such as Emmanuel College, aren?t paying anything. Why are some going along with the mayor and some not?

It?s not hard to discern the pattern that he bigger ?compliers,? such as Boston University, happen to be institutions that have done a lot of construction lately. So it?s only natural that you need to maintain a good relationship with the very city that has to approve building permits and land swaps and other such authorizations. I spoke with David Orlinoff from Concord Financial Organization (he?s a financial adviser for nonprofits), and here?s what he said:

I wouldn?t call it extortion. Although I?m sure that some people could at least call it coercion from time to time. It?s more a question of: What?s the most effective way to do business with a city? And there are times when it?s important to fight and there are times when it?s not important to fight.

Is Menino going to be able to get his 25 percent standard to stick?

On the one hand, nonprofits would like there to be a level playing field, knowing that they?re not going to be alone in making voluntary payments, but that your competitor is, too?that goes a long way in getting everyone on board.

Still, this is something nonprofits are going to wrestle hard with. And here?s why: In the end, the amount of money we?re talking about here is not unaffordable. But nonprofits worry they?re going to be stepping down this slippery slope. Because if they all go along, then that means the mayor of Seattle could say, ?hey look what they do in Boston, why can?t we do that here?? And the more nonprofits pay taxes, the less they have to fund the work they do. This could quite practically set a sweeping precedent for all nonprofits across the country, as David Orlinoff says:

[It] would be a major change in our society?s way of thinking about the role of nonprofits. So it?s a very major thing that is not likely to be settled just because of short-term revenue needs.

It?s clearly something that the boards of all these institutions are going to think long and hard about.
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LINK
 
But looking at the list of the 40-odd institutions, I don?t see churches on here or tiny arts organizations. It?s basically big hospitals and universities and the biggest, high-profile museums.

Right, no soup kitchens in there. It?s because Menino?s going after the deeper pockets. It belies his political bent, because it?s more popular to go after perceived rich institutions with big endowments than it would to go after your neighborhood church. Even though if you follow the logic ? that nonprofits are getting the benefit of city protections like fire and police service for free ? that obviously applies to small nonprofits, too.
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all or nothing IMO. I don't support this, but if I was it needs to be all inclusive.

and has already been said, but most of these institutions don't use nearly as much city services as actual full time residents.
 
The sad part is the only people that end up paying for the taxes will be students and the patients with higher tuition costs and Hospital fees with insurance premium rates going up.
In the end the only people that actually pay more are us.


Is the city looking to tax the Musuem of Science and the New England Aquarium?

I agree that CEO salaries for non-profits need to be looked at by the IRS but I do not agree with taxing the institutions until the city has it's house in order.
 
As a property owner, I do think businesses like hospitals and universities need to kick in. "Non-profit" does not mean that they can't make money hand over fist (as long as it's disbursed as salaries and benefits instead of dividends--I used to run a non-profit so I know whereof I speak) and is anyone really saying that these mega-institutions aren't raking in money? Have we all really drunk the hospital and university kool-aid? Would schools and hospitals have to "pass this along to the consumer" (students and patients)? Probably not if they were willing to use their endowments for something other than generating even bigger endowments. Would they use it as an excuse to sock it to students and patients? Of course they would, but that doesn't negate the fact that 1) it is an excuse and 2) there are a lot of instititutions getting a free ride off of residential and business property owners. And I would respectfully (and virulently) disagree with palindrome's suggestion that major universities and hospitals aren't nearly as much of a drain as full-time residents. If most taxes go for human services (broadly construed), hospitals and schools have more humans per square foot than residential areas.
I think cultural institutions like the MFA that have regular free entry on certain nights are doing their part to "earn" tax-exempt status, but that's the exception to the rule. Now hospitals and universities will howl about how much they contribute to the livability of Boston in terms of producing consumers and tax-payers. How is that different than for other "for profit" businesses?? They employ tax-payers and generate consumers too.
Now I think it is clear that universities and hospitals are not the same as for-profits in every respect and they do add to the public good in ways many businesses can't or don't and should be taxed accordingly, but increasingly cities are seeing universities and hospitals as the huge businesses they are.
 
JohnAKeith said:
Hello.

Sorry for the interruption, but I am putting together a blog entry / newspaper article on the Mayor's proposal to "get tough" with the universities and hospitals and start pushing them to make "payments in lieu of taxes" (PILOT) on all their real estate.

If you're not familiar with the whole topic, it basically boils down to this: non-profits are exempt from paying property taxes on their land. It's a law passed by the Commonwealth. To get around this, cities and towns set up "PILOT" programs which "encourage" non-profits to make tax payments based on the assessed value of their properties. In Boston, the city suggests that the "voluntary" payments be 25% of the amount that would be due if the property was fully-taxable.

Some universities and hospitals pay "full" value. BU pays $4 million per year. Harvard pays less. Brigham & Women's pays its full value.

Other organizations take a pass and pay nothing.

Seems inequitable, right?

Now that the city of Boston is facing a $140 million deficit, this year, the mayor is pushing for an overhaul of the program so that everyone pays something. (To be fair, this issue has come up, time and again, over the years ... all the way back to Ray Flynn and beyond.)

So, what do you think? Should non-profits be exempt because of the "contributions they make to our society"? Should all non-profits? What about museums and homeless shelters and community health centers? Should they have to pay something?

Sometimes, the non-profits compromise. They pay a percentage based on the "income-earning" parts of a piece of land. So, if a medical center has a Starbucks on it, they would figure out what percentage was income-producing and make a payment just for that portion.

This week, BC's 10-year master plan was approved. BC is in the process of buying 2000 Commonwealth Ave. This property is ginormous. It brings in an estimated $400,000 in property taxes, each year. If BC buys it and turns it into dorms, then it goes off the city's tax role.

Fair? Not fair? Tough luck?

What are you thoughts on the whole thing?

Thanks a lot!
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Some churches could afford IMHO 2-3% tax... As you mentioned before the sex scandal look how much land the Catholic Church amassed alone.
 
Tombstoner said:
As a property owner, I do think businesses like hospitals and universities need to kick in. "Non-profit" does not mean that they can't make money hand over fist (as long as it's disbursed as salaries and benefits instead of dividends--I used to run a non-profit so I know whereof I speak) and is anyone really saying that these mega-institutions aren't raking in money? Have we all really drunk the hospital and university kool-aid? Would schools and hospitals have to "pass this along to the consumer" (students and patients)? Probably not if they were willing to use their endowments for something other than generating even bigger endowments. Would they use it as an excuse to sock it to students and patients? Of course they would, but that doesn't negate the fact that 1) it is an excuse and 2) there are a lot of instititutions getting a free ride off of residential and business property owners. And I would respectfully (and virulently) disagree with palindrome's suggestion that major universities and hospitals aren't nearly as much of a drain as full-time residents. If most taxes go for human services (broadly construed), hospitals and schools have more humans per square foot than residential areas.
I think cultural institutions like the MFA that have regular free entry on certain nights are doing their part to "earn" tax-exempt status, but that's the exception to the rule. Now hospitals and universities will howl about how much they contribute to the livability of Boston in terms of producing consumers and tax-payers. How is that different than for other "for profit" businesses?? They employ tax-payers and generate consumers too.
Now I think it is clear that universities and hospitals are not the same as for-profits in every respect and they do add to the public good in ways many businesses can't or don't and should be taxed accordingly, but increasingly cities are seeing universities and hospitals as the huge businesses they are.
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Great post Tombstoner,

But I still disagree. The Hospital and Universities are the bloodline to Boston without these instititutions we would be living in Detriot.

Boston is the second largest employer in the city.
It's time to cut spending.
Have you seen some of the salaries coming out of city, 100k on the average for state & local workers with a pension?
Police, Politicans, Fireman, Teachers, city workers.
I'm not saying that they are not worth every penny it just doesn't make sense if the private sector salaries are not even half of that.

I was just reading in the Boston Herald yesterday about John Buonomo who got arrested for stealing money out of copy machines estimated to be over 100K out of Cambridge court house. This is a local politican who still receives his pension from Somerville. This is not right. This guy is a Criminal but the taxpayers are supporting his state pension.

I'm not saying Non-profit's should not be looked into by the IRS especially executive pay should be capped. But the whole point of Non-profits is the reinvest in the area and I believe that the Universities are living up to their end and the city is not. The Universities and Hospitals keep their real estate spotless which brings up the value of the entire city, most of the instititutions have their own security police force.

The city needs to rein in on their spending and leave the private sector alone. The problem with the private sector is once you have an idea everybody has their hand out in the city of Boston and that is why it's not a business friendly environoment. Remember Microsoft & Facebook were both Harvard boys and they couldn't leave this area fast enough when they began to gain momentum.

Growing Tax Revenue is the solution not taxing with more to support Govt Spending.
 
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Tombstoner, are you a property owner in the city? I am and have absolutely no problem with universities, hospitals, museums, and even churches getting a free ride.

I knew what I signed up for when I decided to live here.

I really wouldn't want it any other way.
 
Tombstoner said:
As a property owner, I do think businesses like hospitals and universities need to kick in. "Non-profit" does not mean that they can't make money hand over fist (as long as it's disbursed as salaries and benefits instead of dividends--I used to run a non-profit so I know whereof I speak) and is anyone really saying that these mega-institutions aren't raking in money? Have we all really drunk the hospital and university kool-aid? Would schools and hospitals have to "pass this along to the consumer" (students and patients)? Probably not if they were willing to use their endowments for something other than generating even bigger endowments. Would they use it as an excuse to sock it to students and patients? Of course they would, but that doesn't negate the fact that 1) it is an excuse and 2) there are a lot of instititutions getting a free ride off of residential and business property owners. And I would respectfully (and virulently) disagree with palindrome's suggestion that major universities and hospitals aren't nearly as much of a drain as full-time residents. If most taxes go for human services (broadly construed), hospitals and schools have more humans per square foot than residential areas.
I think cultural institutions like the MFA that have regular free entry on certain nights are doing their part to "earn" tax-exempt status, but that's the exception to the rule. Now hospitals and universities will howl about how much they contribute to the livability of Boston in terms of producing consumers and tax-payers. How is that different than for other "for profit" businesses?? They employ tax-payers and generate consumers too.
Now I think it is clear that universities and hospitals are not the same as for-profits in every respect and they do add to the public good in ways many businesses can't or don't and should be taxed accordingly, but increasingly cities are seeing universities and hospitals as the huge businesses they are.
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I really disagree. I work with some universities, and know that while some pay "less" in PILOT than their peers, all of them provide some return to the city in form of scholarships to the kids from "lower income areas," community access/programs, or other activities that contribute to the well-being of the city.

And, if it's one, it's got to be all. Get the pederasts from the Church in on it, get the museums, get the Neighborhood Association of the Back Bay in on it.

This is a terrible precedent that, if I were a college president, would actually challenge in the courts.
 
JohnAKeith said:
Tombstoner, are you a property owner in the city? I am and have absolutely no problem with universities, hospitals, museums, and even churches getting a free ride.

I knew what I signed up for when I decided to live here.

I really wouldn't want it any other way.
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Yep--a Boston property owner.
So I guess you shouldn't complain about anything in Boston that was here when you got here, because "you knew what you signed up for." Good for you.
 
bbfen said:
I really disagree. I work with some universities, and know that while some pay "less" in PILOT than their peers, all of them provide some return to the city in form of scholarships to the kids from "lower income areas," community access/programs, or other activities that contribute to the well-being of the city.

And, if it's one, it's got to be all. Get the pederasts from the Church in on it, get the museums, get the Neighborhood Association of the Back Bay in on it.

This is a terrible precedent that, if I were a college president, would actually challenge in the courts.
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Yes, I understand that universities give scholarships and do good stuff (I was also a university professor in a former life). For-profits have foundations, give scholarships, contribute to the arts -- maybe not on the scale of universities -- but then they pay taxes on top of it (except when they don't but corporate loopholes are another matter). As I said, I don't think for-profits and non-profits are the same--they aren't. But we have to wake up to the fact that many significant cities (Pittsburgh, Cleveland, and Boston to a lessor extent) are home to massive, profitable and profit-hungry companies that take huge amounts off the tax rolls in the name of being "non-profits." They make HUGE profits--they just disburse them differently and have different tax shelters available to them than companies do.
 
TheRifleman said:
Great post Tombstoner,

But I still disagree. The Hospital and Universities are the bloodline to Boston without these instititutions we would be living in Detriot.

Boston is the second largest employer in the city.
It's time to cut spending.
Have you seen some of the salaries coming out of city, 100k on the average for state & local workers with a pension?
Police, Politicans, Fireman, Teachers, city workers.
I'm not saying that they are not worth every penny it just doesn't make sense if the private sector salaries are not even half of that.

I was just reading in the Boston Herald yesterday about John Buonomo who got arrested for stealing money out of copy machines estimated to be over 100K out of Cambridge court house. This is a local politican who still receives his pension from Somerville. This is not right. This guy is a Criminal but the taxpayers are supporting his state pension.

I'm not saying Non-profit's should not be looked into by the IRS especially executive pay should be capped. But the whole point of Non-profits is the reinvest in the area and I believe that the Universities are living up to their end and the city is not. The Universities and Hospitals keep their real estate spotless which brings up the value of the entire city, most of the instititutions have their own security police force.

The city needs to rein in on their spending and leave the private sector alone. The problem with the private sector is once you have an idea everybody has their hand out in the city of Boston and that is why it's not a business friendly environoment. Remember Microsoft & Facebook were both Harvard boys and they couldn't leave this area fast enough when they began to gain momentum.

Growing Tax Revenue is the solution not taxing with more to support Govt Spending.
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I absolutely agree with you Rifleman about the scandal that is Boston government (I recently posted on the signage boondoggle in another thread). It's repulsive, but that's not the issue. The issue is whether "non-profits" (who make profits--even they acknowledge that) are paying their fair share. And I won't keep us off-track by noting the corruption in university, hospital and churches, but you know I could... I also agree with you that Boston is becoming less business-friendly and it's biting us on the ass.

I have to correct your statement that "the whole point of Non-profits is to reinvest in the area..." No, it's not. Again, they would be the first to agree. Universities, hospitals and churches are not premised on reinvestment in the area--universities are premised on knowledge generation, hospitals are alleviating illness and suffering and churches on...I haven't got a clue, but the answer is not "Boston."

Yep, tax money is grossly misspent and businesses are not taxed in a smart way, but I don't think that's what we're talking about.
 
Tombstoner said:
Yes, I understand that universities give scholarships and do good stuff (I was also a university professor in a former life). For-profits have foundations, give scholarships, contribute to the arts -- maybe not on the scale of universities -- but then they pay taxes on top of it (except when they don't but corporate loopholes are another matter). As I said, I don't think for-profits and non-profits are the same--they aren't. But we have to wake up to the fact that many significant cities (Pittsburgh, Cleveland, and Boston to a lessor extent) are home to massive, profitable and profit-hungry companies that take huge amounts off the tax rolls in the name of being "non-profits." They make HUGE profits--they just disburse them differently and have different tax shelters available to them than companies do.
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I disagree with your premise, that non-profits live to "take huge amounts [of ????] off the tax rolls in the name of being 'non-profits.'"

*Some* may make massive profits: the Catholic church, for example. But it is the law. Menino and Friends are asking a select few for protection money, doing an end-run around the law. Simply because it's popular to bite the hand that feeds. I fear/hope one of those hands will clench into a fist and strike back.

By the way, if the City wanted to generate more property tax revenue, perhaps they could sell some land ...
 
Tombstoner said:
Yes, I understand that universities give scholarships and do good stuff (I was also a university professor in a former life). For-profits have foundations, give scholarships, contribute to the arts -- maybe not on the scale of universities -- but then they pay taxes on top of it (except when they don't but corporate loopholes are another matter). As I said, I don't think for-profits and non-profits are the same--they aren't. But we have to wake up to the fact that many significant cities (Pittsburgh, Cleveland, and Boston to a lessor extent) are home to massive, profitable and profit-hungry companies that take huge amounts off the tax rolls in the name of being "non-profits." They make HUGE profits--they just disburse them differently and have different tax shelters available to them than companies do.
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Those corporate foundations are non-profits as well, and the money the company puts in the foundation is removed from the tax system as well. Should we tax donations to non-profits?

In response to a 'simulated bill' I'd like to see the universities send 'simulated bills' back for all the volunteer work and community programs they offer.
 
Tombstoner said:
I absolutely agree with you Rifleman about the scandal that is Boston government (I recently posted on the signage boondoggle in another thread). It's repulsive, but that's not the issue. The issue is whether "non-profits" (who make profits--even they acknowledge that) are paying their fair share. And I won't keep us off-track by noting the corruption in university, hospital and churches, but you know I could... I also agree with you that Boston is becoming less business-friendly and it's biting us on the ass.

I have to correct your statement that "the whole point of Non-profits is to reinvest in the area..." No, it's not. Again, they would be the first to agree. Universities, hospitals and churches are not premised on reinvestment in the area--universities are premised on knowledge generation, hospitals are alleviating illness and suffering and churches on...I haven't got a clue, but the answer is not "Boston."

Yep, tax money is grossly misspent and businesses are not taxed in a smart way, but I don't think that's what we're talking about.
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Tombstone, You really got me thinking with your previous post about the Non-profits. I think in the end the entire tax code system needs to be junked and rewritten especially when we have all these blue chip companies like GE sticking it even more to the taxpayers. Our lawmakers are all for the corporations. That is the problem I have taxing the Non-profits right now. It gives the same assholes aka (politicans) even more power and a bigger agenda. If GE pays no taxes on certain income why in the hell should Non-profits pay? That is the problem with the system right now.

If we had politicans looking out for the taxpayers best intersts of this country then I would be able to consider sometype of property tax on the non-profits in the future. Boston Univesity seems to be dishing out plenty of money to the city of Boston right now.

The city of Boston needs to get its books in order, a balanced budget, sometype of control on the Pensions and Healthcare costs before looking for a new tax base.

Pretty soon Tombstone they will tax you for looking the wrong way. If anything I would rather see taxes cut in private and personal incomes. I am a strong believer that a country would grow alot stronger without so many regulations, taxes and beaurcracy.

Sales tax in itself is the biggest scam in history. We have our paychecks taxed once then when we have to go to the store for necessities to live on and we get taxed again.

So to answer your question taxing the non-profits is still not a good idea. If it came down to the fact that Menino had a choice to tax the non-profits and the reduce the taxes on the residents in the city then that is whole other matter. But to just Tax NON PROFITS because the city needs even more money than I am not for it until they figure how to balance their books.
 
I'm for eliminating income tax and implementing a consumption tax simultaneously.
 
KentXie said:
I'm for eliminating income tax and implementing a consumption tax simultaneously.
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I agree. If there's one thing this country really needs it's another way for the poor to get poorer and the rich to get richer.
 
Justin7 said:
I agree. If there's one thing this country really needs it's another way for the poor to get poorer and the rich to get richer.
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I was ready to explain to KentXie how regressive such a tax would be, but you've done a much better job. Bravo!
 
Justin7 said:
I agree. If there's one thing this country really needs it's another way for the poor to get poorer and the rich to get richer.
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Although if the poor got off their collectively lazy asses and actually worked rather than sulking about letting other people(like you) make excuses for them and fight their battles perhaps there wouldn't be such a disparity.
 
Isn't that a bit simplistic though?

Don't you think it's possible that the root causes of poverty are bit more complex than "Poor people are lazy"?
 
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