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Harvard and MIT are nonprofits so normally don't pay taxes (meaning property taxes, income taxes, etc -- they do pay payroll taxes and sales taxes). Between th

by gumby 3y ago

Harvard and MIT are nonprofits so normally don't pay taxes (meaning property taxes, income taxes, etc -- they do pay payroll taxes and sales taxes). Between them and all the churches, quite a large percentage of Cambridge's property, especially commercially-zoned property, pays no tax at all. But for some reason, those two institutions just happen to make large donations to the city and state every year. Personally I'm neutral on taxing the endowment. I can't get around the paywall (archive.ph seems to be having trouble with bloomberg links today) so I don't know if this is an asset tax or a tax on realized gains. Given how the institutions use their endowments (they just hoard them to game the US News ratings, which is pointless for Harvard and MIT) it's probably good.

brightball 3y ago
Why wouldn’t they pay property taxes? I thought nonprofits only escaped income taxes because it was often donations?
- KMag 3y ago
  It's the other way around. It's the non-profit part of the donations to non-profits that relieves the non-profit from paying taxes on the revenue, not the fact that it's a donation. If you somehow made a voluntary donation to, say, your local bar, the bar would still be taxed on that revenue (assuming it's not somehow a registered non-profit bar).
yieldcrv 3y ago
non-profits pay property taxes on real estate holdings unless that state/municipality has an exception for non-profits in that regard too
- DonsDiscountGas 3y ago
  I believe Massachusetts does have that exception.
ghaff 3y ago
>But for some reason, those two institutions just happen to make large donations to the city and state every year. Because that's part of the deal those institutions basically cut with at least the city (don't know about the state) decades ago. It's pretty reasonable. They don't have to pay taxes and are arguably good for the city as a whole but, of course, they're dependent on a lot of city services. When you're as wealthy as they are, it's just sensible not to see how far you can push things in the direction of paying the least possible amount.
- Ekaros 3y ago
  See case Disney in Florida... And they found lot of very good reason why some things should have ended long ago...
  - kjkjadksj 3y ago
    Honestly the disney arrangement felt like it was to get better services on their properties than what they could ever get the local government to do otherwise. You can tell as soon as you’ve crossed the border into disney country and it goes well beyond just the roads and signage being much nicer.
- kjkjadksj 3y ago
  Not sure about these colleges but honestly colleges offer a lot of services to the local community. They might police a certain area directly. They might maintain certain roads. They could run their own sewer setup or run their own powerplant. They probably maintain a datacenter. They might even run or own a hospital, or even run a small school for observational studies in their education program. To say nothing of the payroll tax added by their usually massive employee headcounts, plus all the tax revenue coming in from income tax of students working nearby and that payroll tax, sales taxes as well.
- gumby 3y ago
  I guess I should have put quotes around “But for some reason”. They aren’t doing it out of the goodness of their flinty hearts.

by gumby 3y ago

brightball 3y ago

Why wouldn’t they pay property taxes? I thought nonprofits only escaped income taxes because it was often donations?

KMag 3y ago
It's the other way around. It's the non-profit part of the donations to non-profits that relieves the non-profit from paying taxes on the revenue, not the fact that it's a donation. If you somehow made a voluntary donation to, say, your local bar, the bar would still be taxed on that revenue (assuming it's not somehow a registered non-profit bar).

yieldcrv 3y ago

non-profits pay property taxes on real estate holdings unless that state/municipality has an exception for non-profits in that regard too

DonsDiscountGas 3y ago
I believe Massachusetts does have that exception.

ghaff 3y ago

>But for some reason, those two institutions just happen to make large donations to the city and state every year. Because that's part of the deal those institutions basically cut with at least the city (don't know about the state) decades ago. It's pretty reasonable. They don't have to pay taxes and are arguably good for the city as a whole but, of course, they're dependent on a lot of city services. When you're as wealthy as they are, it's just sensible not to see how far you can push things in the direction of paying the least possible amount.

Ekaros 3y ago
See case Disney in Florida... And they found lot of very good reason why some things should have ended long ago...
- kjkjadksj 3y ago
  Honestly the disney arrangement felt like it was to get better services on their properties than what they could ever get the local government to do otherwise. You can tell as soon as you’ve crossed the border into disney country and it goes well beyond just the roads and signage being much nicer.
kjkjadksj 3y ago
Not sure about these colleges but honestly colleges offer a lot of services to the local community. They might police a certain area directly. They might maintain certain roads. They could run their own sewer setup or run their own powerplant. They probably maintain a datacenter. They might even run or own a hospital, or even run a small school for observational studies in their education program. To say nothing of the payroll tax added by their usually massive employee headcounts, plus all the tax revenue coming in from income tax of students working nearby and that payroll tax, sales taxes as well.
gumby 3y ago
I guess I should have put quotes around “But for some reason”. They aren’t doing it out of the goodness of their flinty hearts.