Cities Shake Down Nonprofits for Property Taxes "voluntary payments" Linked to the Value of Their Property


Boston's new tax assessor

When cities are not forking over millions to fund the culture inferiority complexes of their favorite billionaires, they are, naturally, complaining about being out of money. And as field researchers have repeatedly observed, politicians facing empty coffers bear a striking resemblance to raccoons on trash day.

The New York Times today showcases the latest fad in municipal raiding:

As recession-racked cities struggle to balance their budgets with everything short of feeling behind sofa cushions for loose change, a growing number are seeking more money — just don't use the word taxes — from nonprofit institutions that occupy valuable land but by law do not pay property taxes. […]

Boston has been sending letters to its largest nonprofit institutions this year, telling them the value of their land and asking them to begin making annual payments that would eventually rise to a quarter of what they would owe if they paid property taxes. […] And the mayor of Providence, R.I., Angel Taveras, cited Boston's example this month when he called on nonprofits to pay more money to the city.

"Every citizen, every city worker, every taxpayer, every business and every organization — including tax-exempt institutions — must share part of the burden of saving our city," Mr. Taveras said in his budget address.

You will surely enjoy the euphemisms deployed in these shakedowns:

I think the most important conclusion is that this should be a collaborative process

While Boston has long collected voluntary payments from its nonprofit institutions, it has done so haphazardly, with some universities paying millions of dollars, while their peers paid little or nothing. So Boston's mayor, Thomas M. Menino, convened a task force that studied the issue for much of last year and decided to try to establish guidelines for the voluntary payments. This year the city is trying to collect voluntary payments from all nonprofits with property worth more than $15 million. The payments will eventually rise to a quarter of what the nonprofits would pay in property taxes if they were taxable, with the provision that they can get credit for up to half of the money they owe by providing quantifiable "community benefits" that directly help city residents. By the time the system is phased in, the city hopes its annual payments from nonprofits will rise to $48 million from $15 million. […]

A study last year by the Lincoln Institute of Land Policy, a research institute in Cambridge, found that the voluntary payments had already been made in at least 117 municipalities in at least 18 states. But Daphne A. Kenyon, a visiting fellow at the institute who was an author of the report, said more cities were expressing interest in such payments as the fiscal crisis had continued, views of nonprofits had evolved and the antitax climate had grown more pronounced in many places.

"I think the most important conclusion is that this should be a collaborative process," Ms. Kenyon said.

Ah yes, the "collaboration" between the people with the guns and the people with the money, and the "voluntary" contributions of the latter. Symbiotic, really.

Just why?

Stories like this–complete with the lament that "more than half of Boston's land [is] exempt from property taxes" (damn those elite universities!)–I think go a long way toward explaining why Americans so consistently place tax hikes at or near the bottom of proposed solutions to the we-are-out-of-money problem (see the Reason-Rupe Poll for more numbers on that). Until governments stop handing out corporate welfare to billionaires and unaffordable pension promises to their public sector union allies, and start taking such pre-preliminary steps as selling off city-owned golf courses, Americans are going to have a hard time believing that we have anything other than a spending problem, and a harder time still being treated by our various governments as little more than potential revenue centers.

Katherine Mangu-Ward interviewed the Philanthropy Roundtable's Adam Meyerson about political pressure on nonprofits back in the March 2010 issue.