If non-profits can pay like the big boys…we should tax them like the big boys.
Really. Last year, Republican senators expressed concern over the million-dollar plus salary of the Boys and Girls Club CEO.
http://www.huffingtonpost.com/…
In 2008, the Partners Healthcare CEO took home $3.4 million.
http://www.usatoday.com/money/…
And it came to light in 2009 that the CEO of the Brockton Hospital took home nearly $1M in salary and perks.
http://www.enterprisenews.com/…
Recently, DavefromHarvard noted some big salaries of local nonprofits, particularly noteworthy when compared with the salary of the Governor – $140K:
There are hundreds of these companies that contract with agencies in the Executive Office of Health and Human Services, and the salaries of the executives running them are often above $100,000 as well. In 2009, we looked at a few of the firms that contract with the Department of Developmental Services. A few examples from among the vendors that we reviewed that year were the following:
* Vinfen: 8 executives making over $100,000 a year, with the president making $376,000, including benefits.
* Justice Resource Institute: 7 executives making over $100,000.
* Seven Hills: 4 executives making over $100,000, with the president and CEO making $520,600, including benefits.
* Work, Inc.: 5 executives making over $100,000.
Running a whole state….vs, running a non-profit organization. Clearly running a non-profit pays better.
Enough already. The debate should not be about whether these CEOS “deserve” their salary and compensation, its about whether the organizations they run are truly “non-profits.” I don’t think health insurance companies should be non-profits. The budget cuts are coming, and we can’t afford to pretend that these “profitable for some” non-profits are still non-profits.
I’d say it would be fair to set a cap on the percentage of budget that can be devoted to compensating executives.
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p>Not that this is going to happen, of course.
Foundations which raise money for scientific research have huge budgets. Foundations which deal in in-kind, volunteer hours, or other non-cash projects have much smaller budgets, even if they are larger organizations.
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p>My concern: no matter how you try to limit, the non-profits will have ways to game the system if that’s what they want to do.
CEOs can only have X times the salary of the lowest-paid employee.
Thanks for posting the links justice4All…those numbers make you want to cringe (and scream)…
earn about $250,000/yr. Of course that varies depending on specialty etc. I don’t get the arrogance of the CEO thinking they deserve such a salary. At this rate, we will never graduate doctors, only fledgling CEOs.
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p>I don’t think you understand the definition of a non-profit. Instead of distributing their annual profit to shareholders, they invest within the organization towards defined goals. That means they operate just like any other business: they strive to take in more money than they pay out. When they succeed at that, they invest the money within their organization, and likely compensate their Chief Executive for a job well done.
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p>While I hate health insurance companies, and I hate paying my monthly premium, you have to recognize that they are FORCED to act like a business when making decisions about people’s health… That’s why we need single payer! Non-profit doesn’t mean they have to (or can afford to) operate at a loss. The last thing we need is a for-profit HMO working to deliver dividends to stock holders.
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p>While I recognize that you have requested the debate not go towards whether they “deserve” the money, I really don’t understand how the two can be separated, and have included my thoughts on that subject below.
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p>Just because they are a non-profit does not mean that they shouldn’t be able to compensate their executives competitively.
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p>Comparing the governor’s salary to a non-profit’s salary tells me one thing: we’re probably not paying the governor enough. To attract the type of talent required to run the Commonwealth, that talent has to be willing to take a huge pay cut – Mitt Romney, Deval Patrick, and Charlie Baker are all shining examples of that.
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p>Should a health insurance executive be making $8,000,000 a year? Probably not. But will charging them property tax change his salary? Not at all. It will be transfered to my monthly premium.
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p>As an example, I did work with a very talented Doctor from VinFen in high school – we took VinFen patients out sailing for a week on a 40′ boat. They loved it. VinFen seemed to me, at the time, to be a very well run organization doing a great deal of important work in Boston. $376,000/yr, including benefits, doesn’t seem that steep to me. Neither does having 7 executives making over $100,000 per year. To attract the talent necessary to run an organization and keep an organization funded, you may have to pay them over $100k. Working for peanuts doesn’t appeal to everyone, especially if you could be making an additional $50k/yr in the private sector.
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p>You also have to consider the damage done to the Balance Sheet of smaller organizations that barely break even every year. Think of the added expense that property taxes and excise taxes would bring, think of the organizations that would fold due to that requirement.
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p>So, at the end of the day, my vote is against charging non-profits property taxes, against capping their executives compensation, and FOR single payer!
So you advocate Single Payer. If you hate paying your monthly premium wouldn’t you equally hate paying higher taxes each month for government run health care?
I’d take more comfort in knowing my money was going towards helping everyone in the country instead of paying an $8,000,000 salary. Call me a silly liberal!
your monthly premiums are going to help those in the insurance pool but I see your point.
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p>I agree that no head of a non-profit is worth $8 million. I would also say that no head of a for profit company is worth $20 – $100 million a year in compensation.
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p>Should the founder or CEO of a for profit company be able to become fabulously wealthy? Sure. By virtue of their investment in the company and the talent that they bring over the long term.
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p>These huge compensation deals that both for profit and non-profit boards give CEO’s and Senior Executives are not ultimately about value. They are about keeping score.
Withholdings for entitlements at least from my paycheck pale in comparison to what I would pay for health care premia.
would continue to be the case under single payer. At the very least the taxes you pay would increase substantially.
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p>Many people who advocate that the US convert to a single payer system along the lines of European industrialized countries either forget or are unaware of the existence of a substantial Value Added Tax in the EU.
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p>Germany’s 19% V.A.T. is typical (I believe the maximum is 25% but I could be wrong.) While certain services are exempt there is no income exemption. So a single person making $40,000 a year and spending $30,000 would pay roughly $3800 a year in V.A.T. That would be on top of Federal and State Income Taxes, State Sales Tax and Social Security.
Because at $40,000 in income the Medicare tax would be $660. I’m paying roughly $3,470/yr now for health insurance, so I’ll take the $130 tax cut đŸ™‚
The inadequacy of its funding is one of them, and doesn’t suggest itself as positive example.
Although I must commend the Feds for charging Medicare taxes all the way up. I can’t understand why SS withholdings are capped.
Let’s stipulate, for the sake of discussion, that your $3,800/year figure is correct.
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p>The current costs of health care in Massachusetts for a single person already dwarfs that. I will enthusiastically jump for a plan that provides all of my out-of-pocket expenses for only $316.67/month.
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p>The monthly premium ALONE is twice that, and that premium buys “coverage” that inevitably includes a $1,000/year deductible and imposes drastic limits on prescriptions, referrals, and equipment.
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p>Thanks for helping make the case that government-sponsored single-payer health care is a HUGE win for working- and middle-class residents.
…since we’re talking about nationalizing health care. According to an Agency for Healthcare Research and Quality
study in 2009 (last year figures are available) the average premium for a single person was just under $4600. That would seem to indicate that the average person would be better off under a single-payer system funded by a VAT. However, a majority of people get their health insurance through their employer.
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p>According to the same study, the average employer pays roughly 80% of that premium and the employee pays $957. Even stipulating the inevitability of a $1000/yr deductible, that is basically half the cost compared to the VAT tax.
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p>It’s even worse for the working poor. Today, depending on income they qualify for free or heavily subsidized care through Medicaid. As their is no income exemption under a VAT they would be paying substantially more.
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p>As an example a single person working full-time for minimum wage makes roughly $15,000 a year. Assuming they spend half their income on rent (which is not subject to the VAT) they would spend $7500 a year. A 19% VAT would mean that the “free” health insurance they were receiving would now cost them $1425 a year.
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p>Going the other way, take a married couple each making the state’s median wage. Their gross income would be $130,000. Assuming they spend half their money on goods and services subject to a VAT, they would pay $12,350 a year. That is nearly $10,000 more than that couple would have paid in premiums in an employer sponsored plan in 2009.
First of all, we’re talking about MASSACHUSETTS.
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p>So we should be comparing the costs of government-sponsored health care to health care premiums IN MASSACHUSETTS.
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p>The $3,800/year figure for the cost of that government-sponsored coverage was YOUR number, not mine. I’m merely observing that health care premiums in Massachusetts are significantly higher than that. I know. I’ve run businesses in Massachusetts for two decades — and I’m telling you that if you think an employer can buy health insurance for a single worker from a viable health insurer for $3,800/year, I’d like you to please tell us who that insurer is.
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p>I note that one source suggests (table 5, page 9) that the 2008 “Average Monthly Premium, Single” for Massachusetts was $458. Do you think that number has gone up or down since then?
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p>That whopping $5,496 is for a plan that inevitably has a $1,000/year (or higher!) deductible. So the out-of-pocket exposure for a single worker in Massachusetts is more than $6,500 — nearly twice the $3,800/year figure you cited for government-sponsored single-payer.
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p>You know as well as I do that employers include the cost of benefits in determining their compensation programs. Unless you want to argue that employers are relentlessly greedy and selfish, then we can expect the employer savings in health care benefit costs to be directly translated to increases in employee compensation.
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p>In the next part of your hand-waving, you shifted the discussion to a married couple earning $130,000. That will be a family plan. According to the above source (feel free to offer others), the 2008 Average Monthly Premium for a family in Massachusetts was $1,208. That translates to
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p>$14,496.
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p>Don’t forget that that number typically includes a $1,000/person and $2,500/family deductible. So the actual out-of-pocket exposure for your married couple earning $130,000 is an astonishing
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p>$16,496
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p>Your own number that you offered for that family, above, was $12,350.
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p>Thank you for again making my case for me. That family would save more than four thousand dollars a year with government-sponsored single-payer health care — using your own estimates of the cost of that single-payer plan.
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p>You have demonstrated that government-sponsored single-payer health care would save Massachusetts families thousands of dollars per year right now.
We’re not talking about a national single payer system (which is what I was talking about to hoyapaul.)
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p>So you are talking about how the Massachusetts system works for Massachusetts and won’t work nationally. Agreed. Let’s reject Obamacare and let individual states handle health care.
It’s bad form to put words in your adversary’s mouth.
No, he’s not. Please try to deal with the arguments presented, and don’t say they are what they aren’t.
You’ve only got half of the definition right, chrismatth. Keeping earnings retained, which plenty of corporations do, doesn’t necessarily make a non-profit. It has to have a mission that is in the common good – otherwise – why wouldn’t we tax them like any other corporation?
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p>Well – what happens when the so-called mission becomes a corruption? Doesn’t a multi-million dollar golden parachute qualify as a corruption?
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p>I think when politicians state that cuts are coming and “everything is on the table” – non-profit status HAS TO BE ON THE TABLE TOO. If these non-profits with these exorbitant salaries aren’t paying taxes, we’re paying an enormous opportunity cost by forgoing taxes.
that Coakley’s office is currently investigating.
Non-profits still pay payroll taxes, for example.
because the non-profit can’t pay him in stocks so he’s taxed on that full $8mil at the highest tax rate!
There’s plenty of company in that tax bracket, and still have to pay taxes, including sales tax on corporate purchases. Property tax and sales tax are big burdens and should be reserved for real non-profits, instead of health insurance companies masquerading as one. The only difference between BCBS and any other corporation is that instead of sharing the profits with the share holders, they get to spend the earnings on their CEO, while at the same time, dodging sales and property tax.
executives of nonprofits may not be exorbitant in and of themselves, problems arise when these nonprofits draw all or significant amounts of their funding from the state. That’s the case with Vinfen and hundreds of other human services contractors.
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p>The number of these executives drawing salaries over $100,000 has risen substantially over the past 30 years as the state has steadily privatized human services previously provided by state workers and overseen by state administrators. This has introduced a new layer of higher-priced, nonprofit-sector bureaucracy that the taxpayers nevertheless still pay for.
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p>So, whether you believe or not that salaries over $100,000 are needed to attract talent, those salaries are one reason privatization has not resulted in predicted savings in taxpayer dollars.
David, you do realize you’re advocating the taxing of churches, don’t you? Not that I think that would be a bad thing – after all, why should all of us subsidize the operations of religions that we do not believe in? I would really like to enjoy freedom from religion.
…whether religiously motivated or not. I think some tax exemptions for non-profits are fine, but I don’t think there’s reason to distinguish in law between religious and non-religious non-profits. I confess I didn’t realize until this discussion that BCBS was non-profit; I always thought one of the biggest problems with our health care system was that it was for profit. Objectively, it would make sense for organizations with real property to pay some property tax. Property tax funds things like the fire department and I would expect their assistance if my church caught fire.
I expected your comment to amplify the sentiment in your title, as justification for continuing tax-exemption for religion. Kudos for having a larger view.
do you expect the restaurant to feed them for free or the inn to house them for free? I don’t. I do expect the churches [and other nonprofits] to feed and shelter and help them though… and those nonprofits do just that.
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p>I think nonprofits earn their property tax exempt status by relieving the government of some of it’s role in taking care of those who need help, people who would otherwise require tax-funded services.
would you exempt all nonprofits from property tax, or just those that “relieve the government of some of its role in taking care of those that need help”? What about, say, the Boston Symphony? The Museum of Fine Arts? Or, for that matter, Blue Cross Blue Shield?
if you’d exempt all non-profits, what difference does it make if some (but not all) of them accomplish the “relieving the government” function you mentioned?
Yup. If you own real property, you should pay taxes on it. Pretty straightforward, actually.
Take a land trust that buys properties for conservation purposes.
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p>Organizations like that experience fat and lean years; when they have resources, they acquire land; when they don’t they sit tight, often with low overheads.
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p>Taxing them for the land would raise the off-year overhead to the point that these groups would probably not survive.
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p>Take it a step further: the cashed-strapped municipality would then take the land, which would still not generate any taxes, and ultimately sell it to developers.
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p>The current system, under which property-owning nonprofits may pay something in lieu of taxes (often after public shaming) is far from perfect, but I think it is better than what you propose.
it would be fairly straightforward to say that land under a conservation restriction is not taxable. After all, such land does not financially benefit the owner. Whereas the real property owned by (say) Harvard is of enormous financial benefit to Harvard, yet they pay no tax on it.
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p>I’m not necessarily looking for the perfect solution. What I’m looking for is a rational justification for the present system. So far, I’m not seeing it.
Many non-profits that occupy huge amounts of land DO pay taxes, just not even close to the full amount… “Payment-in-lieu of taxes”
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p>Harvard pays Cambridge and Boston for the use of the property, and has since 1929. Latest number for Cambridge I could find was $1.5 million in 2005 to increase by 2% plus $10k each year. Boston was $40 million over 20 years beginning in 2001.
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p>It’s not even close to paying their share if they were not non-profits, but considering the fact that I am a college student, I’m glad they don’t have another excuse to increase my tuition:
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of hosting Harvard is at last $182M, plus the cost of whatever they use in terms of services and don’t support. And what exactly does Harvard, a private university provide for the common good? Even if you put Harvard aside…what does BCBSMA provide for the common good? They just tried to cancel a policy for a $.10 http://www.bostonherald.com/ne…
are revenue-generators. It owns apartment buildings that it rents out to people who aren’t Harvard students or employees, at market rates, for instance. I do not know if Harvard pays RE taxes on those properties, but it’s doubtful. The Boston Archdiocese is also a large apartment landlord, I believe. Hard to imagine that they lift a large enough relief burden from the city to compensate for that lost tax revenue.
if it isn’t in line with their mission, so the question is if either entity has successfully argued that those apartment rentals are in line with education or religious functions.
Although the Church disagrees:
I wasn’t even bringing it into the discussion, since the amount non-profits agree to pay in the form of PILOT is almost trivial compared to what they’d pay if they paid property taxes.
I think there is an inequity in the benefit of nonprofits versus the impact of their tax-exempt status.
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p>A hospital, or a symphony, or a college, or a fairground, or a homeless shelter all have a regional benefit. But their property tax exemptions have a local impact. This is an implicit transfer between communities. Keep in mind that many (though not all) communities that house tax-exempt non-profits are poorer urban communities simply because that is where the population once was concentrated when these institutions were built.
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p>For example, in Springfield, Baystate Hospital has a huge presence. Many Springfield residents are employed by the hospital. However, many of the higher-paid jobs are held by people living outside of Springfield, and I think that if the hospital was 1/2 mile to the North, in Chicopee, the percentage of jobs held by Springfield residents wouldn’t change much.
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p>The presence of this hospital gives people in this entire region a first-class health care facility. It also deprives the city of millions in property tax revenue.
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p>Maybe what needs to happen here is that property taxes should be collected by the local communities and then a tax rebate should be granted by the state. This would more fairly distribute the “cost” associated with the services provided by the non-profit.
lots of big for-profit businesses supply a lot of jobs too. Yet they pay property taxes. So I’m not sure that argument gets you very far.
I think the argument centers on the mission of the non-profit. A for-profit company’s goal is to pursue profits in any legal way. A non-profit has a mission statement that must satisfy a public goal — for example, a non-profit museum. You can’t start up a 501(c)3 company with a goal to sell as many widgets as possible, the state will not grant this. So I do buy the argument that the non-profit is only allowed to exist when it further goals of the public, and that is why I’m OK with giving them tax exemptions.
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p>It is worth noting that non-profits have to pay taxes on profit-generating functions that do not match their core mission; for example, a church in Springfield runs a banquet hall which it rents out for weddings. Even though the church argued that it uses the revenue from this to further its non-profit mission, courts ruled that the non-profit status could be used to unfairly compete with for-profit businesses in the same space. I think such a decision makes sense.
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p>The non-profit is also technically owned by the public; they cannot merge or sell the company to another without state approval, and if they cease to exist, their assets must be dispersed in a way that benefits the public.