Boston needs to reform its Pilot Tax Program.
The core of this program is to provide the city with tax revenue that would be otherwise avoided entirely by by a non profit which owns a building or parcel of land. Boston is bless with tremendous number of colleges and university’s and while these institutions attract and add to the economy they also use the city and state services , Transportation, Fire, Waste, Police etc. They may not use as many resources as for profit companies and taxable institutions as students tend not to have children in schools, but they do use services and consumer resources. By paying no taxes; citizens are subsiding these institutions.
The pilot program is currently implemented on an adhoc and discretionary bases.
There is no clear policies or set of rules. Fee’s paid to the city range widely between the various universities and colleges.
Any tax policy with such broad mandate invites favoritism and corruption.
Whether it is a Governor in Illinois or a tax collector in a third world country such power and discretion is inviting results that are not in the best interest of its citizens.
All these properties have assessed values. The City need only to apply a flat % rate of that assed value to come up with a fair and reasonable amount to be paid.
In this recession it is time to address and reform the Pilot tax Program
but not for the reason that many do. I don’t think the cities or towns have any business trying to shake down these non-profits to pay any PILOTs at all. It’s true that they use services; so do churches and food banks. Per land ownership, colleges and universities generate a whole lot more value in the local economy than many (all?!) other uses of land by non-profits.
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p>Let’s be honest: the only reason why we as a local society think about taxing this particular sector of non-profits is because we perceive them as being “rich”. We like that they exist, and we acknowledge that they serve to benefit society at large through education and research.
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p>Bah. It’s chasing money that’s been donated specifically to further a legitimate public good, solely because there’s more money there than at a synagogue or shelter. That’s not about principle, that’s about principal.
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p>No thanks.
Universities long ago lost sight of their sole chartered purpose-the benefit of the public.
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p>The de-emphasis of education over research and the ruthless extraction of wealth from student families are shameful.
In fact, the technical definition of a university is one which offers Ph Ds — research degrees. Colleges do not offer Ph Ds. Don’t be fooled by the name of the school — Boston College was outmaneuvered by BU in the namespace, and other “colleges” just like the sound of their name regardless of their postgraduate degree status.
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p>Professors at research based universities [read: every major school you’ve heard of outside of the elite New England four year private colleges] have always been judged by the following criteria, in this order:
1. Research funding and publications
2. Graduate student mentoring
3. Undergraduate student teaching
Based on numerous conversations with professors at a dozen universities, (3) wasn’t even mentioned through the mid 90s unless the prof was a total bomb in the classroom. (3) is still ranked third today, but the emphasis has actually increased in recent years.
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p>As for “ruthless extraction” — the reality is that the degree is worth a ton of money over the span of a lifetime. Running a university is pretty dang expensive, and as more and more universities are trying to go toe-to-toe with the Princetons and Stanfords of the world, professors salaries are going up faster than inflation. Research costs grow far faster than inflation too, particularly in bio and chem based fields where the equipment is uber-expensive.
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p>incidentally, I think Massachusetts (and other states) ought to spend more to keep tuition down and financial aid up… and I’d love to see “American College” formed by the US gov’t, focusing on areas where we as a nation need more trained workers, like medicine and “green” fields. Low tuition at state/federal schools helps to keep tuition lower at the private schools.
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p>All of that is beside the point. Does research not further a public benefit? Given that much of it is funded by state and federal grants, it often falls immediately in the public domain anyway. Furthermore, given that for-profit companies do research focused on what’s most immediately profitable, they rarely work on fundamental, long term research nor research which benefits the public good but has thin profit margins. Examples of the former include astronomy and “large” physics, mathematics, atmospheric science, zoology, etc. etc. An example of the latter is working on solutions to malaria, typhoid, and other low-margin illnesses instead of erectile dysfunction or happy pills.
I think that every non-profit brings its own set of pluses and minuses to the community in which they reside.
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p>Remember, the reason a non-profit is allowed to be a non-profit is because they serve a public purpose. Some non-profits serve more of a regional population, others serve more of a local population. The public benefit is not uniform.
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p>If there existed a hospital within a city that didn’t really employ many city residents, and if a lot of traffic resulted from people trying to get to it, I think that pursuing that non-profit for more PILOT money is perfectly acceptable.
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p>I really do think it is a case-by-case negotiation, although admittedly the municipality has little bargaining power.
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p>One thing that Springfield has been doing is not exempting ancillary functions of non-profits that directly compete with other private businesses. For example, there is a church that runs a banquet hall, it rents it out for weddings, etc. That piece of their property is not exempt from taxes. Yes, it can be argued that the money from those activities just go towards the main mission of the organization, but they also directly compete with other private banquet halls and exempting them from taxes unfairly tilts the competitive advantage toward the non-profit.
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p>Great line. But what’s wrong with making tax policy about principal? One goal of tax policy is to redistribute, and if some of the richest entities in a given geographic entity happen to be non-profit, why not tax them?
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p>Not to do so is to disproportionately burden lower income taxpayers.
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p>The fact that they do good works doesn’t automatically exempt them from an obligation to pay their social fair share.
a non-profit is redistributing wealth already. In the case of Harvard, they are redistributing wealth from the wealthy contributors [and folks willing to pay full tuition] to society as a whole in the form of research and to those with lower income in the form of financial aid for tuition.
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p>My claim is that because they qualify as a non-profit, they already are contributing more than their social fair share.
I don’t think that’s true. There is no requirement that a non-profit redistribute wealth. They just have to serve a public good, and they can’t turn profits over to anyone.
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p>A non-profit can exist without any outside contributions. For example, you could buy a piece of land, organize as a non-profit, create a playground, and open it up to everyone with an admission fee. You could then use the admission fee to maintain the playground.
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p>The difference between a non-profit doing that and a for-profit doing that is that the non-profit does not have shareholders, so they can’t distribute the profits to anyone. A for-profit could distribute the profits to their owners.
Non-profits create a surplus just as for-profits do. They can’t distribute the surplus to shareholders but they can improve managers’ compensation. There are plenty of 6 figure non-profit managers.
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p>Maybe serving a public good should buy a company a tax break but it shouldn’t get a company off the hook entirely.
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p>There are for-profit human service agencies that get the same state contracts that non-profits get to provide the same services.
Has anyone researched the legal issues with requiring non-profits to pay taxes? I’m pretty sure there’s a problem there…