[quote]
The residents argued that Princeton University, which boasts the largest endowment per student in the country, should no longer be entitled to its tax-exempt status because the school makes moneyfrom its scientific patents, ticketed concerts, on-campus eateries and more. The Ivy League school is operating like a business, the plaintiffs say, so the tax code should treat it like one.
<p>I would guess that Rutgers also makes money from its “ticketed concerts, on-campus eateries…” It the state gonna levy local taxes on its State University as well? (Yes, I see this is supposedly a local issue, but P’ton’s non-profit status originates with the feds and the state. The locals can just lobby/cajole/beg for money.)</p>
<p>Elite schools have not been using their big tax breaks (receiving tax-deductible donations, not paying taxes on income and capital gains on multi-billion dollar endowments) to restrain their list prices, so I’d like them to lose those breaks. Princeton’s Paul Krugman is forever calling for higher taxes on the rich. Let Princeton’s endowment pay the same taxes that the rich do on their portfolios.</p>
<p>This has been an issue in New Haven for years re Yale. In some ways it’s more crucial in New Haven since it’s a relatively poor city, and Princeton is affluent. </p>
<p>Yale has been making voluntary Payments In Lieu of Taxes–as noted in the article-- in the millions annually. It is the biggest property holder in town, and it’s commercial and housing property are taxed. It also provides many cultural and educational opportunities and programs to the community–some specifically for New Haven, but not the suburbs. </p>
<p>My assessment is that Yale’s efforts are a combination of noblesse oblige and response to pressure. But it’s less than a tax bill, and helps with the politics of seeing it doesn’t happen. </p>
<p>They also argue that as the biggest employer in town they indirectly generate loads of tax revenue. </p>
<p>There was a recent controversy where Yale made a one time payment of $3 million for permanent ownership of a street it had been leasing for the past 20 years. </p>
<p>I wonder if the Princeton lawsuit will result in a settlement where Princeton forks over something, or ups its contribution if it’s already making one.</p>
<p>(My point, or the colleges’s argument is that tuition could/(would be?) higher without endowment income to pay for operating expenses of the college; cash is fungible.)</p>
<p>^the historical problem in New Haven is that in its manufacturing hay day, Yale was a small piece of the pie. But as manufacturing died out that tax base was not replaced by the the current two big nonprofit players in town–Yale and Yale-New Haven Hospital. New Haven–aside from a few affluent ghettos-- is in not much better shape than Bridgeport, another big manufacturing town, or Hartford, after much of the insurance industry headed out of state or to the suburbs.</p>
<p>It seems like people are always envious of people that have a lot more money than them just sitting around (this coming from somebody from a low-income background). Yes, the University has $17 billion. But why does that make it the prime target? People are attacking the University because it has the largest endowment? Princeton is known for its more-than-generous financial aid. If I did not receive an exorbitant amount of money from Princeton in financial aid grants (which I do not have to pay back), I could not attend this great institution. It really made my dream come true. Why can’t people just mind their own business instead of vying for a chunk of someone else’s pie? </p>
<p>Plus, the University does make voluntary contributions to the town. If Princeton is forced to forgo tax-exempt status, I would like to see every university become non tax-exempt. That’s only fair. It’s not fair to target someone simply because they’re sitting on a bigger pile of cash than you are.</p>
<p>Question: what expenses does the town incur from having the university there, and are those expenses not adequately covered by PILOTs? </p>
<p>Property taxes are used to cover the costs to the town of having people who live there. Often, the biggest cost is educating the children who live in those homes; other costs include ambulance, police, and fire. I fail to see how a college would incur anything more than a nominal cost to the town: its students are paying to attend there, not cluttering up the local high school and causing it to hire an extra teacher. The school has its own police and medical personnel. There aren’t senior citizens who need a senior citizen centre, transportation, or other nice things that we like to provide to our elderly. The school has its own recreation areas, so it’s not like the town has to build and maintain another basketball court. </p>
<p>However, if the university were to disappear and a developer were to build houses in the place of the school, yes, the town would collect more taxes - but its costs would skyrocket. “Hey, we got five hundred single-family homes here, and five hundred families to buy them!” Congratulations, you now need to spend thirty million on a new elementary school to educate all those kids - but I guess you got more property taxes!</p>
<p>It’s entirely disingenuous to talk about the money that you would receive if the university were not there, but not to talk about the money that would be spent. (Other posters talked about the money that would be lost, and it’s a great point: with all that tuition money flowing in, university towns are net gainers.)</p>
<p>I pay taxes on my investment gains. I regard Princeton et al. as wealthy and self-serving institutions that should also be taxed on their gains at the same rates I pay. If universities were less insulated from taxes, maybe academics would not be so enthusiastic about raising taxes.</p>
<p>I’d estimate that having a college such as PU in town increases the value of all private property in town by at least 25%. Just look at home prices within Princeton versus nearby towns. New Haven-Yale=Bridgeport.</p>
<p>As I understand it, the University is earning its money from commercial ventures, such as ticket sales, food at the Frist gallery, etc. That’s the profit that the plaintiffs are challenging. Now, I wouldn’t be completely averse to making the University pay capital gains taxes on such profits, as long as it is applied uniformly across all universities, as all universities make some kind of money off of ticket sales at sporting events, selling food in cafeterias, etc. But somewhere in there, property taxes were mentioned in the suit. It doesn’t make sense to me to make the University pay property taxes, as most of the land the University owns is used for education and research purposes, which should allow it to remain tax-exempt. </p>
<p>Further, the University already pays over $10 million to Princeton township every year. The town is relatively affluent, compared to many other college towns. Many of my professors couldn’t afford living there and indeed, many live in neighboring towns and commute. I do not see a compelling justification for making the University pay more in taxes to the town, given that the town does not need that money anyway. The profits from those business ventures were distributed to academics - now, whether that money will eventually get funneled into research funds to allow for research to better humanity, I don’t know.</p>
<p>Aside from the cultural benefits, the museums, the concerts, etc., Bridgeport is not really doing much worse than New Haven. And it has a zoo, beautiful minor league basebal stadium, and a nice concert arena–3 things worth a visit and not in New Haven.</p>
<p>If it’s good that wealthy people should be taxed more to subsidize poorer ones, why shouldn’t wealthy universities be forced support less well off schools?</p>
<p>The suit primarily concerns local schools and Princeton schools are by no means “less well off”. Princeton High School offers every single AP class, for Christ’s sake. Now, if you’re speaking in a more general sense, you may be onto something. But there’s no way to apply the tax code uniformly and justify it in many cases. For instance, many universities have feeder high schools “University Highs” (Note that Princeton High School is not such a school). These University Highs are generally affluent and offer kids many more opportunities than those afforded at other high schools. Now, the only way to remedy the tax system to direct revenue earned from taxing universities to impoverished schools districts would require something at the federal level, but currently, public schools are mainly funded by local property taxes. To redirect those funds would require an overhaul of the educational system and how it has been funded for many years. </p>
<p>Since Princeton High School already is so affluent, I maintain that there is no reason to generate revenue to increase its funding via a property tax levied upon the University, which is what some proponents advocate.</p>
<p>Of all the charitable scams out there, why pick on Princeton? Clean up all the others first, then maybe cast an eye on the Tigers! BTW if it ever did go taxable, does anyone think that when after the accountants and lawyers got done, that it would ever pay tax?</p>