Moffat '13: Yes
I’m not going to argue the University isn’t “paying its fair share” with its current exemption from most property taxes. I don’t think this debate should be about fairness — it should be about compassion for our neighbors who are struggling to live.
With millions in unfunded liabilities and a huge deficit problem, Providence’s budget crisis hasn’t gone away. The school district is struggling to make ends meet, and vital social services that help struggling families have been cut by both sequestration and city budget constraints.
I urge you to consider for a moment all the ways an additional $30 million in property taxes could help Providence. In a state where drug overdose is the leading cause of adult accidental deaths, property taxes from Brown could provide much-needed funding for overdose prevention programs and drug education. In a state where more than 1,000 children remain homeless, $30 million could pay for lifesaving shelters and family assistance services. In a state where a worker has to earn $22.12 an hour — three times the minimum wage — and work 40 hours a week just to afford rent for the average apartment, $30 million would allow Providence to invest in affordable housing and help end the vicious cycle of perpetual poverty.
But doesn’t the University already do enough for Providence? Why should we sacrifice even more to provide these things for the city?
Because it would be an incredibly powerful statement about Brown’s moral integrity. Because it would signal a profound commitment to the Providence community and to social justice. Because it would help thousands of desperately needy families and children. This, I argue, is a sufficient moral reason in and of itself.
I’m not saying the University is evil or wrong not to pay property taxes. Rather, I’m suggesting that we go over and beyond what is morally required. We should volunteer to pay property taxes out of empathy and compassion for the children and families of Providence that are struggling to stay alive.
My opponent will no doubt argue that Brown shouldn’t pay because every dollar we give away is a dollar we lose to attract faculty or provide financial aid for students. I doubt that these are the only options we have, but unfortunately this question can’t be settled definitively until the Corporation decides to open its books and make its budgeting process more transparent.
But with an endowment of $2.52 billion, surely we can sacrifice some luxuries to help those who need the money more than we do. When one fathoms the amount of good that could be done in the city with an extra $30 million a year and compares that to what Brown might lose, the better option, in moral terms, is clear.
Jared Moffat ’13 thinks Brown could still live comfortably with a $2.49 billion endowment. He can be reached at jared_moffat@brown.edu.
Drechsler '15: No
The charter under which the University operates, the final version of which was penned in 1764, established that the University should be “freed and exempted from all taxes.” This charter demonstrates the long history the University has had with exemption from property taxes.
Yet since Providence’s fiscal troubles were brought to light in 2009 — due in no small part to the state’s out-of-control public pension system — the University has come under fire for its exemption from property taxes. Other institutions such as Harvard, Yale, Princeton and Penn have all also come under the public eye because of their tax-exempt statuses.
Yet unlike for-profit businesses, the University does not have spare money that will otherwise be returned to shareholders or taken by owners. Each dollar the University generates is directly applied to benefitting students.
While increasing taxes on a for-profit business may do nothing more than shrink the wallet of its owner, increasing taxes on the University will put a dent in its ability to provide students its world-famous education. This is true especially given that Brown’s endowment is far smaller than those of its peer institutions.
As a provider of academic enrichment and a center of research and expertise, the University should be a city priority. The social good the University provides the city, Rhode Island and the world is immeasurable.
The University should continue to support Providence. In fact, it has agreed to pay $31.5 million in voluntary payments to the city over the next 11 years, an increase from the $2.5 million a year of voluntary payments it has made annually since 2003, and in addition to over $3.5 million in other fees and taxes. The University contributes $600 million to Rhode Island’s economic activity, $90.1 million in scholarships and financial aid to Rhode Island students and 8,200 jobs to Rhode Island workers.
The non-monetary benefits to the city should not be discredited, considering the number of Brown students who participate in local government, organizations and community service. The bigger picture includes worldwide recognition, tourism, human capital and infrastructure.
The differences between College Hill and downtown Providence are stark, and the University should play a part in improving the condition of these surrounding areas. But paying high property taxes would mean the University’s much-needed funds could be spent any way politicians chose and would likely be used to plug the hole in the city’s runaway pension system. Rather, the University should work together with the city to contribute in ways that actually benefit Providence families. Community service, contributions to Providence’s education system and improving Providence’s human capital are all ideal alternatives.
Alex Drechsler ’15 can be reached at alex_drechsler@brown.edu.
Drechsler’s Rebuttal:
Jared Moffat ’13 and I agree in principle: The University should help its surrounding areas. But while Moffat makes an emotional plea urging you to consider the need for affordable housing, shelters and drug overdose prevention programs, these only distract from the issue at hand.
The truth is that if the University paid more property taxes, the money would not go toward any of Moffat’s pet projects. The money would be in the hands of Providence’s politicians. With an unfunded pension liability estimated at $900 million dollars, that is where our annual $30 million would go. In fact, the unfunded pension system is the reason the city asked the University to pay property taxes in the first place.
Paying property taxes has nothing to do with the “children and families of Providence” but instead has everything to do with retired Providence firemen living comfortably in Miami. The University is already struggling to live off of an endowment that is significantly smaller than those of its peer institutions. Every dollar paid to the city means less money for academic programs, faculty hiring or financial aid. If the University is going to make this sacrifice, we must ensure it is spent on improving actual problems facing Providence families rather than wasted on a pension system.
Out of sympathy and compassion, we should help the community in trying to accomplish the goals Moffat points out. But this cannot be done through high property taxes on nonprofits, because the University would lose any control whatsoever over how this money is spent. It can be done through volunteer payments to the city for specific projects, and it could be accomplished through engaging the surrounding areas in community service projects. If we actually cared about the children and families struggling in Rhode Island, we would focus on supporting them directly.
Moffat's Rebuttal:
Alex Drechsler ’15 wants us to believe Providence deserves its budget crisis. Because if we believe Providence got itself into this mess, then we will feel less guilty about Brown not paying property taxes. It’s true: Providence’s budget woes are partly the result of an unfunded pension system. But that seems like an awfully callous way to explain to a nine-year-old why her school is closing down. The fact is that those who suffer from the city’s budget cutbacks are mostly children and families who did nothing to cause the city’s dire situation.
Blaming Providence for its perilous fiscal condition overlooks the fact that the present budget crisis is the direct result of irresponsible financial speculation on Wall Street that struck a double blow to cities like Providence with the onset of the 2008 economic crisis. Prior to 2008, cities were advised to invest their pension funds into accounts that ended up being toxic and padded with subprime mortgage-backed securities. When the market tanked in 2008, so did the pension funds. And when the housing bubble burst and home values plummeted, cities like Providence, which receive the majority of their revenue from property taxes, took another huge hit. Providence suffered a double whammy from the financial industry — an industry that has no shortage of Brown graduates.
I’m not trying to suggest the University is greedy or evil. Quite the contrary, I agree with Drechsler that Brown already provides a number of great benefits to Providence. But that doesn’t undermine my position that property taxes from the University could dramatically improve our neighbors’ lives with little cost to us.
The argument that Providence would hurt itself by collecting taxes from the University isn’t convincing either. The University is not going to lay off thousands of employees or cease to be one of the greatest universities in the world because it pays a bit in more municipal property taxes. With a $2.52 billion endowment, I think we could manage just fine. Our neighbors need the money more than we do. Let’s do the right thing and help them.
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