Dean Baker received his B.A. from Swarthmore College and his Ph.D. in Economics from the University of Michigan. He’s written “Rigged” Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.
In this book, he brings up the “Baker Rule”: Nonprofits lose tax exempt status if they pay the boss more than the president’s $400k. If they can’t find someone competent to do the job for the same pay as the president, then it’s not the sort of outfit taxpayers should be subsidizing.
This goes along with Jay Gonzalez and his plan to tax the wealthy colleges and universities that are “nonprofit” but pay their bosses a heck of a lot more than $400K.
I’m on board with this, as should all working class citizens of the Commonwealth.
There’s no good way to rationalize borrowing from the House Republicans’ culture war playbook.
An idea is an idea, regardless of whose playbook it appears in.
What matters is the legality of idea and its human consequences, intended and unintended. Not the publisher.
Land grabbing behemoths like Harvard should be easy, natural targets for Democrats. Their reluctance inspires cynicism.
Taking shots at Harvard does not justify taking a Republican culture war attack and making it more extreme.
What culture war attack? Against Harvard? The Harvard types used to be Republicans while the working stiffs were throwing back tall boys and voting for Tip O’Neil. My hometown of Cambridge became totally unaffordable for anyone who isn’t a millionaire or in public housing. It is a grim foreshadowing of our middle class free future. One where people of color are going to be assumed to be on assistance, as an ‘enlightened’ Harvard employee recently did. One where It does not help that two gigantic institutions gobbled up about 60% of the developable land and use it without paying a dime in local or federal taxes.
Those are billions of dollars literally sitting there doing nothing and waiting to be redistributed to working people. It is the Republicans who want the wine and brie eaters to keep their endowments and the Democrats who want the Dunkins drinkers to get a break. The fact that we continue to fail to do so is because our own party is becoming wealthier and out of touch, something another Cambridge native Tom Edsall has been documenting for decades.
Attacking Harvard is smart politics and smart policy. It is not the same thing as attacking education. I want to seize their money and make UMASS free for everyone in the Commonwealth, through to the PhD level. There is nothing more pro-education and egalitarian than that. I want them to build mixed use housing and community land trusts to keep their status. Maybe this is wicked radical, but attacking them as their own students did is how their employees got living wages that ended multigenerational poverty for their employees.
Everyone should be open to discussing ways that our big nonprofit institutions can contribute more to the public good than they already do, whether through taxes, PILOT, or more direct service. But given the way you frame it, I sincerely hope the Democratic Party is not looking to you for help with messaging! “Impose a modest tax on their income to pay for public programs!” is one thing. “Seize their money” to be “redistributed to working people!” is, ah, unlikely to resonate, at least in my humble opinion.
You make my point for me. Democrats too often oppose the politics of confrontation and embrace the politics of compromise, which ends up netting us fewer policy benefits in the long run. The classic “America is already great” or “we aim high” campaign. I want to fight back.
Personally, I am a moderate liberal not an extremist. I would rather impose a modest tax or make the PILOTs mandatory and streamlined. I doubt the schools will accept it. Threaten to seize their property and wealth outright, and they will agree to it. It worked when their own students shut Harvard down until it paid its workers a living wage. It could work again. It’s rhetoric that will also win us back Baker/Brown voters locally and Trump voters nationally. They want fighters, they don’t want negotiations in the Harvard Club over tea and crumpets.
@ tea and crumpets: I’m actually ok with letting the current generation of wealthy men and women enjoy their tea and crumpets after the gift and estate tax is pegged at about 95% for estates in excess of, say, $2 M.
An individual has to consume a LOT of tea and crumpets to burn through ten or twenty million dollars. I’m happy to smile and thank them for funding my grandchildren’s future upon their death.
The question of how existing institutional wealth should be handled is quite interesting. It isn’t clear to me that there are any defensible reasons to avoid taxing these institutions when their reported total assets exceed some modest threshold.
I think even a moderate liberal who supports non-profit exemptions would be hard pressed to argue why a donation from a wealthy alum to Harvard gets the exact same tax write off as a donation to an actual charity. I am all for tweeking the tax code to discourage vanity philanthropy. Or better yet, replacing philanthropy entirely with a tax code that actually hurts the wealthy and helps the middle class.
I’d rephrase your last line. The goal of the tax code should not be to deliberately “hurt the wealthy”.
@ hurt the wealthy: By all means —
“… a tax code that reduces wealth concentration by taxing the wealth of the very wealthy and increasing the wealth of the middle class.”
Giving to charities to help those less fortunate should be it’s own reward. There should be no deduction from your income so you can pay less in taxes. Bill Clinton famously donated used underwear and took a tax deduction.
If someone wants to donate to a cause there should be no deductions whether it’s a political party, medical malady, college or a religion (and when the religions stick their noses in politics by endorsing candidates/causes they become a political party).
You don’t sound like a moderate liberal in the prior comment. I suppose that is your point.
I think we have to be realistic that we had a moderate liberal propose moderately liberal policies for eight years and get nowhere doing so while the far right went even further right and labeled him a socialist anyway. Apparently the real thing is polling better than capitalism right now. Might as well argue from that vantage point and move to the actual liberal center rather than start from there and get pushed right.
Personally, I prefer the public option to single payer as a matter of policy. Vermont is a great case study of how reinventing the wheel is a dead end. A public option that allows people to buy into an existing popular program like Medicare is a much better policy than trying to build an American NHS on top of our existing health care system. As a matter of politics however, I am glad every plausible 2020 candidate is staking out the single payer position on health care. It makes it far more likely that we end up with a public option.
Similarly, if we threaten to tax their endowments and convert their property into community land trusts, maybe they increase their PILOTS beyond a pittance and start developing affordable housing on their property. It certainly seems better than doing nothing which is what Walsh and Baker are doing right now.
MIT and Harvard are the two largest taxpayers into the City of Cambridge’s coffer, collectively providing greater than 20% of all taxes. to the city. twenty percent of a big f-ing pie is quite a bit of a lot.
Harvard and MIT pay:
— full and fair taxes on all commercial properties they own
— voluntarily pay PILOT (which is not a ‘pittance’) against the total of non-profit tax exempt properties
— voluntarily agreed to limit the amount of commercially taxed property converted to non-profit.status
How’s Cambridge doing? Is it hurting? Is it a seared wasteland of fallow public services leading to greater crime and despair? Is it a dystopian nightmare? Where’s robocop when you need him?
I seem to recall that you, James Conway, are a graduate of one of their more illustrious public schools that Cambridge has on offer… so you’re best placed to tell us the state of the City as a result of its enforced penury at the miserly hands of MIT and Cambridge.
Or maybe you just want to kill the goose with the golden egg..
@impose a modest tax: This is unresponsive. Income is not wealth. The primary effect of income taxes is to raise even higher the barrier that separates the wealthy from the rest of us.
The issue we need to address is WEALTH concentration. The thread-starter misses this key distinction as well. The very wealthy have a rich variety of ways to avoid such limits and such taxes, and they have a long line of well-paid professionals ready to do that for them.
The only way to solve this problem is to seize some of the wealth from the very wealthy. I don’t know about “messaging” — I rather strongly suspect that ANY effective proposal will be “unlikely to resonate” with the handful of people it targets.
What we are doing is unsustainable. The uncomfortable question we must face is how much blood we want in the streets when the inevitable seizure happens. If we want a non-violent resolution, then it is past time we start looking at very concrete ways to make the needed seizure happen.
The most straightforward way — with deep American historical precedent — is to restore the gift and estate tax to something in excess of 90% for estates above a certain ceiling. Such “generational transfer taxes” do exactly what needs to be done and do so using well-understood and well-tested legislative mechanisms.
It’s going to have to be done sooner or later — no matter how likely it is to “resonate”.
I am in favor of taxation of estates with a relatively modest exemption: in Massachusetts a decedent can today pass $1 million at death without estate tax and without any estate tax planning, which IMHO is about right. But of course estate taxation has nothing to do with Harvard’s endowment. (1) The tax is on the privilege of transferring assets at death. (2) In any case, there has always been an estate tax deduction for gifts to qualifying charities, e.g., Harvard.
I agree that Harvard and its endowment is separate from the gift and estate tax.
My intent was to show that we do have ways to seize wealth from the very wealthy that are far more aggressive than a modest income tax and are also well within the envelope of legislative precedent.
GOP Culture War waged by Jamie Eldridge?
http://walpole.wickedlocal.com/news/20180923/political-notebook-jay-gonzalez-and-gov-charlie-baker-vye-to-be-least-aligned-with-trump