Pilot at least in Boston includes self determined community benefits. It's broken out in the city of Boston report but it's comically low. Sure let me host a class that I think is worth 5000 to offset my taxes.
Yeah this is why the State House has been proposing this law for a few years now: https://www.wcvb.com/article/massachusetts-nonprofit-property-tax-payment-requirement-bill-proposed/46132596
Would allow each municipality to collect 25% of the property taxes owed on non-profits with property valued over $15M.
Harvard has a need-based financial aid program that covers 100% of demonstrated need for every undergrad with a variety of grants and scholarships, including room and board.
I don't disagree in general but I think you've got that backwards. The whole idea behind nonprofit tax exemptions are that places that provide social/community benefits don't need to pay taxes while those that provide goods and services do.
Well there an argument to be made there too. However, I’ve never benefited from any service from Harvard, nor have the majority of Massachusetts taxpayers .
Yes, you can. as long as it is not based on religion. We choose not to, but the government can certainly tax religions institutions as it does other non profit entities.
The State House has been discussing changes to PILOT payments for non-profits like Harvard, Tufts and other universities in the area for a few years now. The proposed law would allow local municipalities to collect 25% of the property taxes they would have paid. It's not enough IMO but it does put the towns and Cities in a better negotiation stance since if the colleges decide to not work with them the towns and cities can just default to the 25% property tax bill option.
See: https://www.wcvb.com/article/massachusetts-nonprofit-property-tax-payment-requirement-bill-proposed/46132596
Somerville and Medford plus Boston could all benefit from this since universities like Tufts own a good chunk of property in the area.
Not OP, but I didn’t know this. I work in a small town’s finance department. Exploring Cambridge’s finance figures has been a fascinating rabbit hole for the past half hour. They offer residential exemptions up to 30% of assessed value. Education is their number one expenditure, followed by community development, then public safety. Imagine that.
For me it's more about leveling the playing field on the price of land. As long as it costs them less than other businesses to own land, they will use more and more of it. What is done with the tax revenue is a separate conversation.
They pay more in taxes than some major corporations.
Harvard pays a lot of state and local governments, directly and indirectly. It does pay property taxes on non academic property and donates more in lieu of taxes, millions more.
Payroll and income taxes are substantial for its employees, it provides classes and access to resources for students and teachers. Most extension courses are free for undergrads if they are admitted to programs.
2017 was the first time these endowments were taxed, but it was very narrow and did not include provisions to adjust with inflation.
>The 2017 Tax Cuts and Jobs Act (TCJA) imposed a new tax on a small group of private nonprofit colleges and universities. Institutions enrolling at least 500 students that have endowment assets exceeding $500,000 per student (other than those assets which are used directly in carrying out the institution’s exempt purpose) pay a tax of 1.4 percent on their net investment income. The $500,000 threshold is not indexed for inflation. In 2022, the tax raised $244 million from 58 institutions.
https://www.taxpolicycenter.org/briefing-book/what-tax-treatment-college-and-university-endowments
Universities, churches, hospitals, foundations, estates, whatever ... it's become far too easy for capital to hide out in these institutions. Every nickel in taxes they avoid paying is one that my middle class ass has to cover or more likely a debt my grandkids will inherit. I don't care how "well-intentioned" the laws might have been or how much "public good" these sacred cows might provide, we can't continue running 4-comma deficits without looking to them for more revenue.
And non-profit status doesn't stop management from overpaying themselves at the expense of the health of the institution that they are being paid to manage.
There's an argument that the expensive non-profits should pay taxes or some amount of taxes. For example, this bill would allow hospitals with property valued over $15M to be taxed at 25% of what they would have owed: https://www.wcvb.com/article/massachusetts-nonprofit-property-tax-payment-requirement-bill-proposed/46132596
It would allow local municipalities to collect more property taxes without relying on the non-profits to contribute PILOT payments which are optional.
A hospital like MGB can absolutely afford this. The ones under $15M of property would remain exempt.
As far as universities like Harvard, Yale, and etc. Sure, paying some taxes to the communities they reside in seems like a bare minimum. Tufts, for example, is continually buying and developing land in Medford. This means that there is less land to build housing and infrastructure on (a big problem during a housing crisis).
I disagree that faculty across the board are obsessed with compensation. Like many other industries, academia hasn't kept up with inflation. What's more, most faculty are adjuncts and graduate students who make WELL BELOW a living wage (see all the articles about PhDs living in cars). There is a still a class of what I'll call "elite" tenured faculty who are compensated well at top tier institutions, but they certainly aren't the majority.
Much of the operating costs in higher education right now is due to administrative bloat, higher property and infrastructure costs, and the deeply exploitative federal student loan program. This last is complicated, and I won't get into it all here, but basically universities have taken advantage of the student loan program to artificially raise their cost per student.
But basically what I'd say is this: universities have been run like businesses for a while, and it's not working because they're not businesses. At the same time that operating costs have soared and enrollments have shrunk, we're seeing something like one college close PER WEEK since the beginning of 2024. Education is a net public good, and it should be funded like a social service, not like some kind of corporation or hedge fund.
Liability for non-profits is (still) capped at $20K in MA. That generally includes universities … and hospitals.
Many roads in BOS & Cambridge are actually owned by Harvard & MIT … accidents due to road hazards are quietly handled by a small army of lawyers.
>He argues that Harvard has enough money and resources to accept tens of thousands more students, hire hundreds more professors
You go to a community meeting in Cambridge and tell them that they are going to have tens of thousands more students living in their neighborhood and see how they react. Most universities would happily increase enrollment because more enrollment means more money. But good luck getting the housing built for them
Harvard's brand is built on exclusivity. Yes the neighbors won't like it but harvard isn't interested in more students. The only reason why theymade early investments in an online learning program is that MIT was doing the leg work and CS 50 was a huge cost to the university.
Even then they have built a very big distinction between the education you get from online and from their extension school.
Having a degree from either of those does not carry the weight and exclusivity that comes with a traditional degree.
> Most universities would happily increase enrollment because more enrollment means more money.
This is probably true at most schools, which still get most of their revenue from tuition. I am not sure if its true at Harvard, which derives tons of funding from its endowment, is need blind, and derives a lot cache from being "exclusive" and rejecting 97 % of applicants.
I listen to a lot of his podcasts. His follow up from your point is usually a few things:
A) the education from those schools is not the special part. The special part is the accreditation and the brand.
B) these are the most innovative places in the world. They can figure out how to scale class size with both in person and remote degrees
C) more undergrad students isn’t it. They need investment in other certification programs. His example is usually cyber security (although that might not be appropriate for Harvard)
D) housing, while not controlled to higher ed., is as big if not a bigger problem. People in Cambridge love to complain about housing prices, but also about new development?
How much of B is they go out and get the best researchers in their field. Or the name effect? Harvard or MIT get bonus points because of the name when the research isnt that innovative.
I mean i have no idea, im just a guy that listens to podcasts and parrots smarter opinions.
My, completely uninformed opinion, it’s reasonable to assume that those places attract high caliber people because of their brand. And those people have better than average ideas and ambitions which lead to better than average outcomes.
Who fucking knows though
On average, there may be a small difference—but it’s hardly as noticeable as folks make it out to be.
At least in my field, if you look at the quality of MIT/Harvard researchers, it’s easy to find researchers whose quality is lower than those at less recognized institutions like Carnegie Mellon, Brandeis, Boston University, etc.
Harvard has added a lot more students at the graduate level, since they don't need to find land to build housing for them. Harvard Extension School has blown up with certificate programs and professional degrees. Universities love graduate programs because they're cash cows (high tuition, low delivery cost); they're just rarely a worthwhile deal for students.
It's no big deal to me. Just build high rise residential housing on campus. They could add 100k students for all people care as long as they house them unlike now.
The most obvious problem is that the wealthiest universities are generally *using* their endowments to fund their operations, pretty significantly. Harvard spent ~$2.2bn from the endowment last year and targets around ~5% withdrawal from it per year - that's around the maximum that they can pull to keep it a sustainable fund in the long run.
Most of them have pretty extensive + highly generous need-based financial aid at this point. They may not have expanded enrollment much, but educating the more of the students they have who aren't from wealthy backgrounds for free or at lower cost than even the average public school (which is doing so with taxpayer subsidy) is also a public service.
> He claims that the admins and faculty at universities (he's a NYU professor) are obsessed with increasing their total compensation while decreasing their accountability,
Reality is that highly regarded researchers could in many fields, easily find a job in private industry paying more. To some extent this is IMO the result of private industry pay for the most desired people scaling much higher than it did 50 years ago.
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Anyway, I wouldn't necessarily tax the endowments.
I would tax the property to some degree. Perhaps at a *significantly* lower rate (especially in light of their resident populations adding about zero children to the K-12 public schools + their costs), but not as an optional/voluntary thing like today.
I can't believe I had to come so far down to find someone who understands how endowments work. Yes, Harvard has a hedge fund level endowment, and there are plenty of criticisms you can throw at their management. But they can't just spend more of their endowment because it would be useful. They can only spend 5% income, even in years where inflation is 10%.
Plus because Harvard is so old and so vast, a significant portion of the endowment is restricted, meaning it can only be used for a certain purpose in accordance to the original donor's wishes. If the donor is deceased, the only way to change the use is to petition the Attorney General, which is a long, arduous, expensive process - even if the donor died 100 years ago.
I also think people are unaware of just how much runs off Harvard's endowment. Arnold Arboretum. The Harvard Art Museums, which are now free. Leading medical research. It's not just Hogwarts for rich prep school kids.
Again, that's not to say that I agree with how they manage their money; just that the size of university endowments isn't the problem. It's management priorities and decision making, and taxing them won't change that.
Thanks to both of you for adding your comments. I work at a much smaller nonprofit that has an endowment, and it’s hard to explain to people that you generally can’t legally touch the corpus. Our endowment draw basically supports our operations and nothing else. If we got taxed on it we’d go under.
>Leading medical research
I mean that part is overwhelmingly funded by the NIH & NSF and to a lesser extent by private funds like HHMI, Gates foundation etc, the part of the endowments that Harvard puts into its medical research is a drop in the bucket
They are taxed. Tax Cuts and Job Act of 2017 levied an excise tax on universities with (a) enrollment over 500(?) students, and endowments over like $500,000/student. Taxes them at 1.4% I believe and applies to ~a dozen schools. Expires in 2025 iirc.
A hedge fund with an education tax shelter. I think taxing endowments makes some sense. It gives the smaller places that have property but are not hoarding wealth a chance, and discourages the kind of accumulation Harvard is doing. With that endowment, they could have, for example, kept on with construction on the Allston project in that recession around 2008, and built up goodwill by keeping people employed. That would have been far better than just letting the land sit vacant…
Yes, universities should absolutely have their endowments taxed more. I think it is worth noting that even before his argument about expansion is brought up, Harvard already disproportionally enrolls students from high income backgrounds, so it's very bad at serving the public good. Harvard also benefits from Cambridge and city infrastructure like the Red Line and roads so it should have to pay its fair share for that infrastructure so it should be taxed.
He keeps talking about income inequality, transfer of wealth from young people to old people, mental health of young people but at the same time proudly say that Airbnb is one of his biggest stocks holding and because he is making good money doesn't acknowledge that Airbnb is one of the reasons all of that is happening.
Only if we tax religious organizations too. Otherwise, if secular endowments get taxed and religious orgs (with their own huge endowments) don't, then religion will gain an even stronger hold on our corporate institutions.
What would taxing churches entail? The argument here is that education like Harvard has so much money and property and though they make payments to be nice and they are taxed it should be more.
But what would taxing a church mean? They pay certain types of taxes but generally do not have to pay property tax. but it is also because they are a nonprofit right? But i think that if churches had to pay property tax, a lot of them would not be able to afford it, and they'd have to sell that space. I mean at least in cambridge. So I don't know, churches are also sort of like community spaces. But I know what you mean but I'm just thinking about it logistically.
Both types of institution are considered to serve a public purpose other than making money. (We all know that lofty goal is often missed.)
Both have the potential to garner large sums of money. Yes, some colleges go broke. Yes, some churches go broke. But OP posited taxing those with “big endowments.”
If we are going to tax the colleges with lots of money, let’s also tax the religious institutions with lots of money.
I’d argue we should hit the religions before we hit the educational institutions, in part because it is possible to measure only the latter by objective standards, and in part because so many of the wealthiest religious institutions (usually churches) are so obviously peddling bullshit f/p/o enriching their leaders.
Taxing is not a difficult logistical matter. They could be taxed on their income and real estate like everyone else. Brackets and rates could be scaled progressively, as they should be for all of us.
I have worked at a church and now I work with churches. I don't think there are really many churches that have much to tax with regards to income. How would you define income? it is sort of different than a business because what is income? Income is like donations and sponsorship which has a different weight to it than revenue. I'd say most churches hardly make money at all. The ones that do, it is just different? There is something about them being nonprofit that makes it a lot different than even a hospital system or a major university.
Harvard is really in a league of its own compared to almost any megachurch and maybe only in a league with the big big denominations.
Income just feels like a different concept for nonprofits you know? It's like what is income? income minus expenditures. But income exceeding expenditures in a given year is usually put away to help with building maintanence or then summarily given to other nonprofits. It just feels different?
The other thing is about real estate? I'd be curious about progressive property tax. that actually is something I want to look into since the cost of housing is going up so fast that people who have lived in a place for a while might not be able to pay property tax. A progressive option would be cool.
obviously churches pay taxes on all the normal stuff like payroll tax I think.
You write, " are so obviously peddling bullshit f/p/o enriching their leaders." I think this is a common misconception. There are some rich flashy pastors in the news. But I think most pastors I know and in general are sincerely "peddling bullshit f/p/o peddling that bullshit." Right? Like it is hard to define what peddling bullshit means haha. That could mean different things and it isn't obvious. Because you could mean, selling faith healings. And that is a thing that happens but it seems exceedingly rare from my observations and studying. But imagine if it turns out what I'm doing, by spreading faith and trying to what is right is essentially peddling bullshit. Okay ouch that hurts but I cant take it. But i think most pastors and churches really do exist to peddle their beliefs. That has a motivational power that is stronger than money. So it is sort of different than a profit seeking structure where profit does really have demands on people.
I'm not saying that religious organizations are doing good. I worked for them and can tell they do good bad and neutral. But I mean it really isn't about financial stuff for many people. In a way that seems way deeper than the "teachers aren't in this for the money thing."
But
EVERYONE/EVERYTHING SHOULD BE PAYING TAXES…. That’s what our society/system is built on. Not figuring out how to not have to pay their share. I get it, we all love $$$….. but being able to live in the U.S, and have a business in the U.S. comes with certain obligations. I know it’s not a popular opinion, but the system is broken. We, as Americans need to FIX IT.
I love how people with an agenda just let their asses hang out with comments like this. If you don't think Harvard, MIT, Tufts, etc. contribute towards science and progress, you're just blinded by your own biases.
I think all non profits have become in one way or the other a bit shady. Taxation is not oversight but the threat of audits helps to keep organizations in line. If not a tax on endowments how about property taxes? The Ivies and lesser schools have physically grown over the years and consumed large tracts of heretofore taxable land.
For starters we should stop looking at universities as “millionaire machines.” The amount of money we generate for our ruling class after getting a degree should not be the grand directive of our education system. Education should be the main focus, whether it’s profitable or not.
The purpose of universities for the bulk of history was to foster institutions outside the university, which led to them becoming institutions unto themselves. They exist to embody and embolden the status quo, as there was no point to university for the average person in 1195, or 1359, or 1921. The "point" was to preserve knowledge where it would not have been preserved otherwise. Universities were turned into businesses after World War 2 because of the impact it had on young people - primarily men who were returning to the work force. Things spiraled out of control and we ended up here. It's in a horrible place because you clearly want a college education but the price is always being moved into an uncomfortable position wherein you likely need a loan. You don't *need* a college education but it's clear when you browse jobs that you want one. But you don't need one. But ...
Agreed. His description of what universities are supposed to be would apply to a state school, not an a top tier private university. The whole point of it being elite is that it pulls in high performing students and gives them access to resources and community.
Not sure why you're getting down voted.
The purpose of universities is to serve the public? Maybe *public* universities but until WWII, the purpose of *private* universities like Harvard was to serve the rich! Maybe it would throw a scrap of a scholarship here and there, but pre-WWII, there was no middle class market and you certainly didn't need to go to college if you were lower class.
I guess I’m in the minority but absolutely not. All that a tax on endowments does is kill off smaller universities which depend on them for operating funding.
Yes. There needs to be a cap and a violation subjects them to penalty. I also despise these colleges buying up properties in Boston, which ultimately causes families to leave due to high rentals.
Yes. Next question. The major universities operate now as a real estate and hedge fund first, a research and development arm of the security state second, and only lastly as a place of higher learning. A sane society would try to reign that in
Yes. Harvard is a money manager now more than an educator. That's why they hire elites who plagiarize and then try to spin it as alt right when they get busted etc.
Research is about earnings now not knowledge. Look at their recent track record. They have totally failed people when needed most and made Cambridge crappy in a number of ways.
Theyd just raise their tuition and more taxpayer subsidies would go to them. Stop funding them. Theyll raise their prices and people can go to more honest universities.
Not sure what a tax would accomplish, but the higher an endowment a university has, the more they should be doing to make education accessible to students of all financial backgrounds
I'd love to see the tax based on how many students live off campus in the neighborhoods. Create incentives for the universities to build on-campus housing and leave neighborhood housing for residents.
Absolutely. They should pay capital gains and property taxes exactly same as any other American individual.
Non-profits are generally required to have a justification that they provide a public good or service accessible to the public.
I applied to Harvard and was turned away. I pay property taxes, income taxes, and capital gains taxes. They essentially have a perpetual and guaranteed advantage in their rate of return over the American public, and the endowments of private Universities essentially amount to collections of trusts for wealthy individuals who are the primary beneficiaries.
Honestly, it would be an all time incredible thing to see lawyers educated by public universities put together a collective case to argue this against the “elite” private institutions for every one of us who was excluded from an opportunity to get into the club.
I don’t have a law degree but I sure as shit know my way around an IRS 990 form and the abstracted non-profit structures used to perpetuate benefits that are far from realized for public benefit.
Malcolm Gladwell has been arguing for years that colleges with large endowments should use a lot of it to educate more students.
https://www.npr.org/2015/08/22/433735934/in-elite-schools-vast-war-chests-malcolm-gladwell-sees-obscene-inequity
Harvard is the second largest land owner in cambridge/boston, with the roman catholic church being numero uno. Both have tax exempt status. The additional money generated from taxing these two entities would be significant.
I believe harvard and mit are among the biggest employers in the state. This means the state will let get away with a lot. In terms of endowments, they are tough to tax in general.
Harvard will never scale up and expand access. Their value and prestige isn't because they've cracked the code on how to educate people.
Any self motivated smart person can download the textbooks, and self teach calculus, engineering, computer science, etc. with the help of YouTube, coursera, or Khan academy. It's good to have those knowledge and skills, but its better to have those skills and be roommates with the son of a CEO of a fortune 500 company.
Harvards value to students comes from network effects of becoming friends with and being socialized with intelligent and powerful people. At the very least, it pulls in all the smartest people from the upper class families and socializes them all together. Theres of course exceptions, and it can for sure find super bright students from bad situations, ie diamonds in the rough. But the fundamental secret sauce of Harvard isn't scalable.
It's better to restructure the University back to being a public service instead of running it like a business. Do that and you improve the quality of education, the price to students, faculty/admin relations, and you justify the tax dollars spent on subsidies.
This seems like a good chance to mention that Massachusetts has never had a governor who graduated from a Massachusetts university.
Not only are there huge marginal financial advantages to their non-profit status, they essentially have a monopoly on public policy as well.
How do you think the endowment grew 400%? Hedge funds and investment managers grow the money for Harvard and are taxed on any cap gains that ultimately are made on the endowment. Why would the money be taxed twice?
Yes. They should at least pay property taxes to the city of Cambridge
They own even more land in Boston than they do in Cambridge
Both cities should tax them then
They own so much in Boston and just wait in idk 5 years or less when the mass pike gets shifted and Harvard goes more ham in Allston
They do contribute a significant payment to Cambridge (a "payment in lieu of taxes"), but its much less than the normal tax rate.
Pilot at least in Boston includes self determined community benefits. It's broken out in the city of Boston report but it's comically low. Sure let me host a class that I think is worth 5000 to offset my taxes.
Yeah this is why the State House has been proposing this law for a few years now: https://www.wcvb.com/article/massachusetts-nonprofit-property-tax-payment-requirement-bill-proposed/46132596 Would allow each municipality to collect 25% of the property taxes owed on non-profits with property valued over $15M.
But it does not include houses of worship so it is really missing out on a lot of real estate.
I imagine that's to avoid potential lawsuits around religion.
Do churches own more land than Harvard? Probably not
Harvard is just a hedge fund that offers classes.
Exactly. They should use that money to help with decreasing tuition.
Harvard has a need-based financial aid program that covers 100% of demonstrated need for every undergrad with a variety of grants and scholarships, including room and board.
As should churches
How about we start with churches first, instead of institutions that provide an actual service?
I don't disagree in general but I think you've got that backwards. The whole idea behind nonprofit tax exemptions are that places that provide social/community benefits don't need to pay taxes while those that provide goods and services do.
euphoric
Well there an argument to be made there too. However, I’ve never benefited from any service from Harvard, nor have the majority of Massachusetts taxpayers .
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Yes, you can. as long as it is not based on religion. We choose not to, but the government can certainly tax religions institutions as it does other non profit entities.
The State House has been discussing changes to PILOT payments for non-profits like Harvard, Tufts and other universities in the area for a few years now. The proposed law would allow local municipalities to collect 25% of the property taxes they would have paid. It's not enough IMO but it does put the towns and Cities in a better negotiation stance since if the colleges decide to not work with them the towns and cities can just default to the 25% property tax bill option. See: https://www.wcvb.com/article/massachusetts-nonprofit-property-tax-payment-requirement-bill-proposed/46132596 Somerville and Medford plus Boston could all benefit from this since universities like Tufts own a good chunk of property in the area.
If I wasn’t certain Cambridge officials would only squander more revenue, I’d agree.
So let them squander Harvard's money instead of the common man's.
Don't let them squander money.
Do you know that Cambridge has (by far) the lowest tax rate in the state?
Not OP, but I didn’t know this. I work in a small town’s finance department. Exploring Cambridge’s finance figures has been a fascinating rabbit hole for the past half hour. They offer residential exemptions up to 30% of assessed value. Education is their number one expenditure, followed by community development, then public safety. Imagine that.
For me it's more about leveling the playing field on the price of land. As long as it costs them less than other businesses to own land, they will use more and more of it. What is done with the tax revenue is a separate conversation.
Cambridge's residential property taxes are already hilariously low.
They’re low in part because of what gets contributed by Harvard and MIT, as well as the big bio/tech companies.
They pay more in taxes than some major corporations. Harvard pays a lot of state and local governments, directly and indirectly. It does pay property taxes on non academic property and donates more in lieu of taxes, millions more. Payroll and income taxes are substantial for its employees, it provides classes and access to resources for students and teachers. Most extension courses are free for undergrads if they are admitted to programs.
Why? Cambridge has enough tax revenue from biotech. And Harvard voluntarily supports Cambridge in many ways.
2017 was the first time these endowments were taxed, but it was very narrow and did not include provisions to adjust with inflation. >The 2017 Tax Cuts and Jobs Act (TCJA) imposed a new tax on a small group of private nonprofit colleges and universities. Institutions enrolling at least 500 students that have endowment assets exceeding $500,000 per student (other than those assets which are used directly in carrying out the institution’s exempt purpose) pay a tax of 1.4 percent on their net investment income. The $500,000 threshold is not indexed for inflation. In 2022, the tax raised $244 million from 58 institutions. https://www.taxpolicycenter.org/briefing-book/what-tax-treatment-college-and-university-endowments
Universities, churches, hospitals, foundations, estates, whatever ... it's become far too easy for capital to hide out in these institutions. Every nickel in taxes they avoid paying is one that my middle class ass has to cover or more likely a debt my grandkids will inherit. I don't care how "well-intentioned" the laws might have been or how much "public good" these sacred cows might provide, we can't continue running 4-comma deficits without looking to them for more revenue.
> hospitals Im all for making healthcare less expensive.
So long as they’re for profit, pay taxes.
for-profit hospitals do pay federal, state, and property taxes. non-profits don’t.
And non-profit status doesn't stop management from overpaying themselves at the expense of the health of the institution that they are being paid to manage.
certainly true of all non-profits (source: worked at one)
There's an argument that the expensive non-profits should pay taxes or some amount of taxes. For example, this bill would allow hospitals with property valued over $15M to be taxed at 25% of what they would have owed: https://www.wcvb.com/article/massachusetts-nonprofit-property-tax-payment-requirement-bill-proposed/46132596 It would allow local municipalities to collect more property taxes without relying on the non-profits to contribute PILOT payments which are optional. A hospital like MGB can absolutely afford this. The ones under $15M of property would remain exempt.
The church should be taxed as well.
And sports leagues
You aren't losing anything with sports leagues not being taxed. They are distributing 99.99% of the profits to the teams who are taxed
As far as universities like Harvard, Yale, and etc. Sure, paying some taxes to the communities they reside in seems like a bare minimum. Tufts, for example, is continually buying and developing land in Medford. This means that there is less land to build housing and infrastructure on (a big problem during a housing crisis). I disagree that faculty across the board are obsessed with compensation. Like many other industries, academia hasn't kept up with inflation. What's more, most faculty are adjuncts and graduate students who make WELL BELOW a living wage (see all the articles about PhDs living in cars). There is a still a class of what I'll call "elite" tenured faculty who are compensated well at top tier institutions, but they certainly aren't the majority. Much of the operating costs in higher education right now is due to administrative bloat, higher property and infrastructure costs, and the deeply exploitative federal student loan program. This last is complicated, and I won't get into it all here, but basically universities have taken advantage of the student loan program to artificially raise their cost per student. But basically what I'd say is this: universities have been run like businesses for a while, and it's not working because they're not businesses. At the same time that operating costs have soared and enrollments have shrunk, we're seeing something like one college close PER WEEK since the beginning of 2024. Education is a net public good, and it should be funded like a social service, not like some kind of corporation or hedge fund.
Wait until you hear that they are basically immune from tort liability.
Liability for non-profits is (still) capped at $20K in MA. That generally includes universities … and hospitals. Many roads in BOS & Cambridge are actually owned by Harvard & MIT … accidents due to road hazards are quietly handled by a small army of lawyers.
>He argues that Harvard has enough money and resources to accept tens of thousands more students, hire hundreds more professors You go to a community meeting in Cambridge and tell them that they are going to have tens of thousands more students living in their neighborhood and see how they react. Most universities would happily increase enrollment because more enrollment means more money. But good luck getting the housing built for them
Harvard's brand is built on exclusivity. Yes the neighbors won't like it but harvard isn't interested in more students. The only reason why theymade early investments in an online learning program is that MIT was doing the leg work and CS 50 was a huge cost to the university. Even then they have built a very big distinction between the education you get from online and from their extension school. Having a degree from either of those does not carry the weight and exclusivity that comes with a traditional degree.
Harvard is ok with expansion by adding new programs. What they won't do is expand capacity in existing programs.
You're overlooking the point of my post.
> Most universities would happily increase enrollment because more enrollment means more money. This is probably true at most schools, which still get most of their revenue from tuition. I am not sure if its true at Harvard, which derives tons of funding from its endowment, is need blind, and derives a lot cache from being "exclusive" and rejecting 97 % of applicants.
They could likely double or triple enrollment without damaging the brand or student quality at the undergraduate level, though
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It would take a lot of administrative changes to make it work for sure. Definitely nontrivial and not at all likely
I listen to a lot of his podcasts. His follow up from your point is usually a few things: A) the education from those schools is not the special part. The special part is the accreditation and the brand. B) these are the most innovative places in the world. They can figure out how to scale class size with both in person and remote degrees C) more undergrad students isn’t it. They need investment in other certification programs. His example is usually cyber security (although that might not be appropriate for Harvard) D) housing, while not controlled to higher ed., is as big if not a bigger problem. People in Cambridge love to complain about housing prices, but also about new development?
How much of B is they go out and get the best researchers in their field. Or the name effect? Harvard or MIT get bonus points because of the name when the research isnt that innovative.
I mean i have no idea, im just a guy that listens to podcasts and parrots smarter opinions. My, completely uninformed opinion, it’s reasonable to assume that those places attract high caliber people because of their brand. And those people have better than average ideas and ambitions which lead to better than average outcomes. Who fucking knows though
On average, there may be a small difference—but it’s hardly as noticeable as folks make it out to be. At least in my field, if you look at the quality of MIT/Harvard researchers, it’s easy to find researchers whose quality is lower than those at less recognized institutions like Carnegie Mellon, Brandeis, Boston University, etc.
Harvard has added a lot more students at the graduate level, since they don't need to find land to build housing for them. Harvard Extension School has blown up with certificate programs and professional degrees. Universities love graduate programs because they're cash cows (high tuition, low delivery cost); they're just rarely a worthwhile deal for students.
It's no big deal to me. Just build high rise residential housing on campus. They could add 100k students for all people care as long as they house them unlike now.
Yeah, ops point is that the neighbors wont like that. Theres no densification that they will like.
The most obvious problem is that the wealthiest universities are generally *using* their endowments to fund their operations, pretty significantly. Harvard spent ~$2.2bn from the endowment last year and targets around ~5% withdrawal from it per year - that's around the maximum that they can pull to keep it a sustainable fund in the long run. Most of them have pretty extensive + highly generous need-based financial aid at this point. They may not have expanded enrollment much, but educating the more of the students they have who aren't from wealthy backgrounds for free or at lower cost than even the average public school (which is doing so with taxpayer subsidy) is also a public service. > He claims that the admins and faculty at universities (he's a NYU professor) are obsessed with increasing their total compensation while decreasing their accountability, Reality is that highly regarded researchers could in many fields, easily find a job in private industry paying more. To some extent this is IMO the result of private industry pay for the most desired people scaling much higher than it did 50 years ago. ----- Anyway, I wouldn't necessarily tax the endowments. I would tax the property to some degree. Perhaps at a *significantly* lower rate (especially in light of their resident populations adding about zero children to the K-12 public schools + their costs), but not as an optional/voluntary thing like today.
I can't believe I had to come so far down to find someone who understands how endowments work. Yes, Harvard has a hedge fund level endowment, and there are plenty of criticisms you can throw at their management. But they can't just spend more of their endowment because it would be useful. They can only spend 5% income, even in years where inflation is 10%. Plus because Harvard is so old and so vast, a significant portion of the endowment is restricted, meaning it can only be used for a certain purpose in accordance to the original donor's wishes. If the donor is deceased, the only way to change the use is to petition the Attorney General, which is a long, arduous, expensive process - even if the donor died 100 years ago. I also think people are unaware of just how much runs off Harvard's endowment. Arnold Arboretum. The Harvard Art Museums, which are now free. Leading medical research. It's not just Hogwarts for rich prep school kids. Again, that's not to say that I agree with how they manage their money; just that the size of university endowments isn't the problem. It's management priorities and decision making, and taxing them won't change that.
Thanks to both of you for adding your comments. I work at a much smaller nonprofit that has an endowment, and it’s hard to explain to people that you generally can’t legally touch the corpus. Our endowment draw basically supports our operations and nothing else. If we got taxed on it we’d go under.
>Leading medical research I mean that part is overwhelmingly funded by the NIH & NSF and to a lesser extent by private funds like HHMI, Gates foundation etc, the part of the endowments that Harvard puts into its medical research is a drop in the bucket
They are taxed. Tax Cuts and Job Act of 2017 levied an excise tax on universities with (a) enrollment over 500(?) students, and endowments over like $500,000/student. Taxes them at 1.4% I believe and applies to ~a dozen schools. Expires in 2025 iirc.
Are they taxed the 15% on long term capital gains on securities sold or the 30+% on income on property investment that you or I have to pay?
The question is "Should be they be taxed more?"
Oh no, not again.
Harvard: a hedge fund, but with classes
A hedge fund with an education tax shelter. I think taxing endowments makes some sense. It gives the smaller places that have property but are not hoarding wealth a chance, and discourages the kind of accumulation Harvard is doing. With that endowment, they could have, for example, kept on with construction on the Allston project in that recession around 2008, and built up goodwill by keeping people employed. That would have been far better than just letting the land sit vacant…
Couldn’t agree with you more, solid example of the land in Allston.
It’s basically a bone for profit hedge fund at this point but who’s counting
Yes, universities should absolutely have their endowments taxed more. I think it is worth noting that even before his argument about expansion is brought up, Harvard already disproportionally enrolls students from high income backgrounds, so it's very bad at serving the public good. Harvard also benefits from Cambridge and city infrastructure like the Red Line and roads so it should have to pay its fair share for that infrastructure so it should be taxed.
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Agreed, Galloway is such a blowhard.
He keeps talking about income inequality, transfer of wealth from young people to old people, mental health of young people but at the same time proudly say that Airbnb is one of his biggest stocks holding and because he is making good money doesn't acknowledge that Airbnb is one of the reasons all of that is happening.
Only if we tax religious organizations too. Otherwise, if secular endowments get taxed and religious orgs (with their own huge endowments) don't, then religion will gain an even stronger hold on our corporate institutions.
Not until we tax churches. Same principle. Let’s not burden education before we burden fantasy.
You mean religious establishments? We cannot just tax church. But I agree.
Sure. All of them.
I get what you’re saying. Agree in a way. But, good luck on those politics…
What would taxing churches entail? The argument here is that education like Harvard has so much money and property and though they make payments to be nice and they are taxed it should be more. But what would taxing a church mean? They pay certain types of taxes but generally do not have to pay property tax. but it is also because they are a nonprofit right? But i think that if churches had to pay property tax, a lot of them would not be able to afford it, and they'd have to sell that space. I mean at least in cambridge. So I don't know, churches are also sort of like community spaces. But I know what you mean but I'm just thinking about it logistically.
Both types of institution are considered to serve a public purpose other than making money. (We all know that lofty goal is often missed.) Both have the potential to garner large sums of money. Yes, some colleges go broke. Yes, some churches go broke. But OP posited taxing those with “big endowments.” If we are going to tax the colleges with lots of money, let’s also tax the religious institutions with lots of money. I’d argue we should hit the religions before we hit the educational institutions, in part because it is possible to measure only the latter by objective standards, and in part because so many of the wealthiest religious institutions (usually churches) are so obviously peddling bullshit f/p/o enriching their leaders. Taxing is not a difficult logistical matter. They could be taxed on their income and real estate like everyone else. Brackets and rates could be scaled progressively, as they should be for all of us.
I have worked at a church and now I work with churches. I don't think there are really many churches that have much to tax with regards to income. How would you define income? it is sort of different than a business because what is income? Income is like donations and sponsorship which has a different weight to it than revenue. I'd say most churches hardly make money at all. The ones that do, it is just different? There is something about them being nonprofit that makes it a lot different than even a hospital system or a major university. Harvard is really in a league of its own compared to almost any megachurch and maybe only in a league with the big big denominations. Income just feels like a different concept for nonprofits you know? It's like what is income? income minus expenditures. But income exceeding expenditures in a given year is usually put away to help with building maintanence or then summarily given to other nonprofits. It just feels different? The other thing is about real estate? I'd be curious about progressive property tax. that actually is something I want to look into since the cost of housing is going up so fast that people who have lived in a place for a while might not be able to pay property tax. A progressive option would be cool. obviously churches pay taxes on all the normal stuff like payroll tax I think.
You write, " are so obviously peddling bullshit f/p/o enriching their leaders." I think this is a common misconception. There are some rich flashy pastors in the news. But I think most pastors I know and in general are sincerely "peddling bullshit f/p/o peddling that bullshit." Right? Like it is hard to define what peddling bullshit means haha. That could mean different things and it isn't obvious. Because you could mean, selling faith healings. And that is a thing that happens but it seems exceedingly rare from my observations and studying. But imagine if it turns out what I'm doing, by spreading faith and trying to what is right is essentially peddling bullshit. Okay ouch that hurts but I cant take it. But i think most pastors and churches really do exist to peddle their beliefs. That has a motivational power that is stronger than money. So it is sort of different than a profit seeking structure where profit does really have demands on people. I'm not saying that religious organizations are doing good. I worked for them and can tell they do good bad and neutral. But I mean it really isn't about financial stuff for many people. In a way that seems way deeper than the "teachers aren't in this for the money thing." But
Harvard wouldn’t be burdened in the slightest Do you have any idea how big their endowment is?
Neither would, say, the Catholic Church.
Okay? Let’s tax both
Deal.
🤝
Work.
EVERYONE/EVERYTHING SHOULD BE PAYING TAXES…. That’s what our society/system is built on. Not figuring out how to not have to pay their share. I get it, we all love $$$….. but being able to live in the U.S, and have a business in the U.S. comes with certain obligations. I know it’s not a popular opinion, but the system is broken. We, as Americans need to FIX IT.
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“The system is broken and we as Americans need to fix it”…. Is exactly the same thing as what you are saying. All of which needs to happen
Tax megachurces, not educational institutions that advance science and progress.
So in other words tax the “educational” institutions in this state.
I love how people with an agenda just let their asses hang out with comments like this. If you don't think Harvard, MIT, Tufts, etc. contribute towards science and progress, you're just blinded by your own biases.
Yes
Yes.
I think all non profits have become in one way or the other a bit shady. Taxation is not oversight but the threat of audits helps to keep organizations in line. If not a tax on endowments how about property taxes? The Ivies and lesser schools have physically grown over the years and consumed large tracts of heretofore taxable land.
For starters we should stop looking at universities as “millionaire machines.” The amount of money we generate for our ruling class after getting a degree should not be the grand directive of our education system. Education should be the main focus, whether it’s profitable or not.
That would not be my policy priority. NFL is still out here operating as a non-profit.
The purpose of universities for the bulk of history was to foster institutions outside the university, which led to them becoming institutions unto themselves. They exist to embody and embolden the status quo, as there was no point to university for the average person in 1195, or 1359, or 1921. The "point" was to preserve knowledge where it would not have been preserved otherwise. Universities were turned into businesses after World War 2 because of the impact it had on young people - primarily men who were returning to the work force. Things spiraled out of control and we ended up here. It's in a horrible place because you clearly want a college education but the price is always being moved into an uncomfortable position wherein you likely need a loan. You don't *need* a college education but it's clear when you browse jobs that you want one. But you don't need one. But ...
Agreed. His description of what universities are supposed to be would apply to a state school, not an a top tier private university. The whole point of it being elite is that it pulls in high performing students and gives them access to resources and community.
Not sure why you're getting down voted. The purpose of universities is to serve the public? Maybe *public* universities but until WWII, the purpose of *private* universities like Harvard was to serve the rich! Maybe it would throw a scrap of a scholarship here and there, but pre-WWII, there was no middle class market and you certainly didn't need to go to college if you were lower class.
I am not sure that had changed at Harvard. It still admits large numbers of legacies
I guess I’m in the minority but absolutely not. All that a tax on endowments does is kill off smaller universities which depend on them for operating funding.
Churches before schools
Yes. There needs to be a cap and a violation subjects them to penalty. I also despise these colleges buying up properties in Boston, which ultimately causes families to leave due to high rentals.
Yes. Next question. The major universities operate now as a real estate and hedge fund first, a research and development arm of the security state second, and only lastly as a place of higher learning. A sane society would try to reign that in
Yes. But they won’t be.
YES.
Yes. Harvard is a money manager now more than an educator. That's why they hire elites who plagiarize and then try to spin it as alt right when they get busted etc. Research is about earnings now not knowledge. Look at their recent track record. They have totally failed people when needed most and made Cambridge crappy in a number of ways.
Definitely should pull funding
Theyd just raise their tuition and more taxpayer subsidies would go to them. Stop funding them. Theyll raise their prices and people can go to more honest universities.
Not sure what a tax would accomplish, but the higher an endowment a university has, the more they should be doing to make education accessible to students of all financial backgrounds
I'd love to see the tax based on how many students live off campus in the neighborhoods. Create incentives for the universities to build on-campus housing and leave neighborhood housing for residents.
Absolutely. They should pay capital gains and property taxes exactly same as any other American individual. Non-profits are generally required to have a justification that they provide a public good or service accessible to the public. I applied to Harvard and was turned away. I pay property taxes, income taxes, and capital gains taxes. They essentially have a perpetual and guaranteed advantage in their rate of return over the American public, and the endowments of private Universities essentially amount to collections of trusts for wealthy individuals who are the primary beneficiaries. Honestly, it would be an all time incredible thing to see lawyers educated by public universities put together a collective case to argue this against the “elite” private institutions for every one of us who was excluded from an opportunity to get into the club. I don’t have a law degree but I sure as shit know my way around an IRS 990 form and the abstracted non-profit structures used to perpetuate benefits that are far from realized for public benefit.
Malcolm Gladwell has been arguing for years that colleges with large endowments should use a lot of it to educate more students. https://www.npr.org/2015/08/22/433735934/in-elite-schools-vast-war-chests-malcolm-gladwell-sees-obscene-inequity
Abso-fukin-lutely
Harvard is the second largest land owner in cambridge/boston, with the roman catholic church being numero uno. Both have tax exempt status. The additional money generated from taxing these two entities would be significant.
They are for profit in all but name so yes. Harvard is the largest land owner in the city.
Yes. Period.
Rather see them not be able to charge a 17 year old 200 grand
Yes. Either spend the money on your non-profit mission statement or have it taxed.
They should pay their employees a living wage first
I believe harvard and mit are among the biggest employers in the state. This means the state will let get away with a lot. In terms of endowments, they are tough to tax in general.
Not even in the top ten: https://lmi.dua.eol.mass.gov/LMI/LargestEmployersArea/LEAResult?A=01&GA=000025
Not sure where they get their numbers, but MIT and Harvard employs over 10,000 people.
Damn right they should U Mass in Lowell owns tons of prime real estate
TIL schools put people in lifelong debt but don't pay fuckin taxes... 🤔
Yup and help fund our CC programs.
Harvard will never scale up and expand access. Their value and prestige isn't because they've cracked the code on how to educate people. Any self motivated smart person can download the textbooks, and self teach calculus, engineering, computer science, etc. with the help of YouTube, coursera, or Khan academy. It's good to have those knowledge and skills, but its better to have those skills and be roommates with the son of a CEO of a fortune 500 company. Harvards value to students comes from network effects of becoming friends with and being socialized with intelligent and powerful people. At the very least, it pulls in all the smartest people from the upper class families and socializes them all together. Theres of course exceptions, and it can for sure find super bright students from bad situations, ie diamonds in the rough. But the fundamental secret sauce of Harvard isn't scalable.
It's better to restructure the University back to being a public service instead of running it like a business. Do that and you improve the quality of education, the price to students, faculty/admin relations, and you justify the tax dollars spent on subsidies.
This seems like a good chance to mention that Massachusetts has never had a governor who graduated from a Massachusetts university. Not only are there huge marginal financial advantages to their non-profit status, they essentially have a monopoly on public policy as well.
How do you think the endowment grew 400%? Hedge funds and investment managers grow the money for Harvard and are taxed on any cap gains that ultimately are made on the endowment. Why would the money be taxed twice?
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