I had to write about this, not just because I agree with the taxpayers of Princeton NJ, but guess who I ran into at the soccer field this AM with my kids in Waltham? The Harvard Univ. men’s soccer team. Like me with my kids, they were doing some preseason pick up drills before the start of the season. For the soccer moms and dads out there, Waltham has the best soccer fields this side of the Mississippi, all turf, indoor bathrooms, paved parking lot, etc. Now you know why Harvard met at our youth soccer fields. I happened to speak with a few of the players, they were extremely nice and complimentary to my kids, nice bunch of student athletes, top notch. So with that in mind. I had to talk about this article I stumbled upon and do hope you find interesting.
Why are the townies in Princeton NJ suing this Ivy League University. Simple…money and lots of it. Princeton Univ has the largest endowment fund per student, the university took in over $115 million from patents in 2011, of which $35 million was given to various faculty members. The lawyer for the plaintiffs told the Times of Trenton that “People in Princeton pay at least one-third more in taxes because the university has been exempt all of these years.” If all of the school’s property were taxed, the bill would come to roughly $28 million a year, instead of the roughly $10 million the university is now contributing voluntarily to town coffers.”
The mayor of Providence, R.I. is going after Brown Univ. “Our taxpayers already subsidize the tax-exempt institutions in this city,” Mayor Angel Taveras said. “It takes the revenue collected from 19,000 taxpayers” to account “for the $38 million in property taxes not paid by Brown University,” he said at a press conference.” The mayor of Pittsburgh is going after the Univ. Of Pitt Medical School for taxes to the Steel City.
Some other prestigious universities have worked out Pilot programs, but they come with strings attached, the university typically gets control of some adjacent streets, zoning laws are changed, and undue influence over the politicians, and all the wheeling and dealing causes more problems.
With more and more cities and towns struggling to meet pension and healthcare obligations, perhaps it’s time to look at the 1917 law passed by congress, which exempted education institutions from federal taxes, which the states and municipalities followed. With all the revenue streams being generated by the Big Oil, I mean Big Education, perhaps they can afford to pay their fair share. I say eliminate the tax-exempt status for all organizations, but I know that is a bridge too far, and nobody in the political world has the guts to make such a bold/radical/fair proposal. In any event, best of luck to the Princeton taxpayers.
http://online.wsj.com/article/SB10001424127887323477604579001294219967488.html?mod=WSJ_Opinion_LEADTop
Princeton is a good example of the benefits–financial and otherwise–a university can provide to the surrounding community. There are all kinds of pharmaceutical companies and other major businesses that probably wouldn’t be in Princeton but for the university and that pay taxes. Similarly, in downtown Princeton there is now a lot of upscale commercial and retail stuff that maybe wouldn’t be there without the university. (There may be issues about what’s in Princeton proper and what’s in Princeton Township, which may be relevant to the costs and benefits, but that’s another story). So when complaining about the loss of tax revenues that tax-exempt institutions cause, it’s important also to consider the increase in the tax base that they create. My guess is that they’re a net positive, and that it’s not even close. Maybe others have data on this. There are lessons for Boston here, too, of course.
Princeton would not be on the map without the University.
It seems to me that big universities are just a convenient target. There is no actual underlying principle of “fairness” involved in the policy. Why should we go after Universities, and not private K-12 schools, parochial schools, churches, YMCA’s etc? Is it fair that homeowners often get taxed at a lower rate than commercial property owners or that people who live in their homes get an excemption? No one really wants to ask those type of questions because no one really cares about “fairness”, they are just looking for someone else to pay other than themselves.
We should end the property tax exemption for ALL non-profits, places of worship, and eleemosynary institutions (except those which are state or municipally owned) except for the actual school buildings and sanctuaries. Those facilities should pay PILOT money based upon their square footage to offset road, fire, police, and plowing expenses.
That is all. Carry on.
PILOT means a payment instead of taxes, so there is still no taxes. If you remove the exemption there is no need for PILOT. Right?
Why should actual school buildings get exempted? What is your philosophical principle?
And as I said, no one is asking about why it is “fair” that commercial property owners often pay a higher rate than residential owners. No one seems to mind that because most of us don’t own commercial property.
After WW II, the federal government relied heavily on taxes from corporations, in fact, the treasury received for taxes from corporations than individuals. Today, the govt gets just .25 cents from a corporation for every dollar it gets from an individual. That’s why it’s fair, they aren’t shouldering the burden at the federal level.
It is beyond comprehension you defend these elite, wealthy institutions, who cater to the upper crust of society. They get all the benefits of society, yet, don’t pay for it. Don’t they like clean water? Should not they pay for our military? How about our courts and prisons and the MBTA? It is time for them to pay their fair share.
Microsoft could tell Seattle they should pay zero in federal and state taxes b/c of the number of employees they hire, spinoff companies, and other ancillary businesses that exist to support Microsoft workers.
The big difference is Microsoft could move, Princeton is stuck where they are, they are not relocating. I dare say if it were not for the taxpayers subsidizing these student loans and research grants, Princeton would not be where they are today, either. So in this case, Liz Warren is correct, they didn’t build that, someone else made it happen.
I am not suggesting we tax Harvard and Princeton into oblivion, like a 39% tax bracket, but how about 15% Fed tax on Big Education? Why does it have to be 0%. Please read a prior diary of mine regarding why Harvard needs to start paying taxes and defend the 0% federal tax or their charitable donations to Boston and Cambridge, which is 10% of what they should pay if their real estate was taxed at full assessment. It isn’t 1917 anymore, lets update the code. What say you Spilka or Koutoujian and the rest of you running for congress. I doubt socialworker will give me Peter’s feedback, I already have Will’s thoughts on this matter as well.
http://vps28478.inmotionhosting.com/~bluema24/2013/03/why-harvard-and-other-universities-need-to-start-paying-their-fair-share-in-taxes/
15% of what? You are just throwing out made up numbers without bother to specify what you are talking about or whether your numbers make any sense.
And you have yet to answer the question as to why Universities should have to pay tax but not other large non-profit organizations such as churches.
In 2009, MA looked at levying a 2.5% tax on endowments over $1 billion dollars. So how much revenue would Deval and CO. have generated if they taxed the rich endowments like Harvard? Just last year alone, MA would have received $500 million in additional revenue.
Read my last paragraph on eliminating the tax exemption for all organizations.
By what philosophical principle do you think we should tax endowments greater than $billion? And who does the taxing? Do we tax the Mormon church because it has billions of dollars?
And you still have not really explained what you are talking about taxing. You started the discussion by pointing out a dispute over property taxes, and now seem to be suggesting that we should be taxing arbitrary assets, but only of non-profits. Why not tax arbitrary assets of individuals? You got a million dollars saved for retirement — great — we can tax that.
What’s your point, don’t start at a billion, you want to include the small college with the smaller endowment fund? And only if we lump in all the churches and YMCA’s? Otherwise, just do nothing?
But it doesn’t really matter. You have utterly failed to explain the rationale for what you are taxing. And have failed to explain why we should tax the assets of non-profit institutions, but not that of for-profit institutions or individuals. Remember you are suggesting taxing assets not capital gain on their investments. Why is it ok to tax Harvard’s endowment but not investment portfolios of individuals, for-profit institutions, or large non-profit foundations that have little physical presence in the state.
More lazy thinking Dan.
Stay tuned
Though it shouldn’t be a wholesale repeal. I KNOW Harvard and MIT make a killing on commercial property like the Hotel @ MIT with attached Starbucks. Harvard owns the Linnean Center and The Garage which serve a wider Cambridge population and have negligible benefits. There is a new condo development at the old mahoneys that will obstruct the vies of long time residents but the zoning process, or an entirely commercial property, falls under “education”. I won’t even get started on Allston. They should be taxed at the same rate for commercial activity like any other business. Maybe they don’t need to pay property taxes on the quadrangles, libraries, laboratories, etc. but they should on their commercial holdings.
This is, exactly, what happensnow:
If they were considered a for profit business, which in fact, they are. If Harvard paid on the true value of their real estate, their contributions don’t even equal 10% of what they should be paying.
A number of big, profitable Boston area not-for-profits should also be included in this discussion regard Payment In Lieu Of Taxes (PILOT). Many such as the MFA and ICA do offer classes to Boston students for free, but that is different than the kind of support that meaningful, consistent payments to a city.
The scholarships and programs that these institutions offer are still under their control, and payments to the city would become part of the city budget to be allocated to the great public good.
If General Electric doesn’t have to pay taxes, Princeton shouldn’t either.
How about Harry Reid or even Liz Warren, anything?
The big summer news out of the White House was corporate tax reform, in a proposal to lower the rate, close loopholes, and use the revenue to invest in jobs. The GOP rejected it out of hand because it raised revenues. Essentially, Obama called their bluff on our “high” corporate tax rate. They want the rate lowered, *and* they want companies like GE to continue to pay zip.
It would lower rates and close loopholes (sounds like Mitt’s idea) but keep the top rate for small businesses at 39%.
Curious, did Obama point out how much GE would pay under his proposal? If so, it would be an easy sell.