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February 15, 2012

Civil War in Rhode Island: Blue vs. Blue

Many states are doing better this year than at any point since the beginning of the recession five years ago. Unfortunately, Rhode Island isn’t one of them. State and local government finances are in a deep hole after years of profligate spending. The only question now is who’s going to pay the price.

Partisans of the Blue Model in Rhode Island have settled on a new target: Brown University. The Wall Street Journal reports that Providence mayor Angel Taveras has accused tax-exempt nonprofits, especially Brown, of a “failure to sacrifice”, demanding that they effectively double voluntary payments to the city over the next ten years.

Brown has tentatively agreed to begin paying more, but this episode may mark the beginning of a civil war pitting the state’s Blue politicians against one of the Blue Model’s strongest institutional and intellectual supporters. Liberal academics at Brown may be all for raising taxes to pay public workers’ salaries, but the university’s endowment is still reeling from the deep hit it took at the beginning of the recession. The old alliance is looking a lot more tenuous.

King Henry VIII, meet the monasteries.

Posted in Blue Social Model, Education, Politics, Quick Takes
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  • Walter Sobchak

    Why do colleges have tax exemptions? Are they supposed to be doing some good for society? Educating the poor?

    As nearly as I can make out, the colleges hunt down ever penny they can find and use that to pay big salaries to tenured faculty, and the ever growing legions of administrators.

    What do the subsidies do for us? The best guess is that they just raise tuition:

    Many for-profit institutions that are not [eligible for Federal Student Aid] offer programs and certificates that are similar, if not identical, to those offered by other institutions that are eligible. The eligible group charges ~75% higher tuition than the non-eligible group. The inference is that hypothesis that aid-eligible institutions raise tuition to soak up the most aid.

    http://papers.nber.org/papers/w17827

    End the tax exemptions and all other higher education subsidies.

  • Kenny

    Oh how I love this.

    And such fighting among the Democratic Party’s coalition members is just beginning.

    Imagine when the blacks finally wake up and realize what the teachers unions have been doing to them and their children since the 1970s.

    And what if the blacks finally see that a lot of the social spending [welfare] of the country have been divered to the overpaid employees of government instead of them?

    And how about the union members in the private sector realizing that it is they who has to pay for the bloated compensation packages of public sector union members? Watch out.

    All this is a grand falling out among thieves.

    Have at it!

  • Mrs. Davis

    Why should anyone get tax exemptions?

  • Jim.

    @Mrs. Davis-

    The power to tax is the power to destroy. Tax exemption for some institutions is the only thing preserving some of our fundamental rights.

    And, as much as I hate to say it, tax breaks for intellectuals (and for useful professionals like doctors) have a very long history in legal codes, and in many places have been very successful in raising standards of living.

  • Corlyss

    And in this corner, Brown University playing role of Mayor Jean Quan . . .

    @Walter and Mrs. Davis

    To promote the activity that is exempt. In this case, Brown is private, so exempt. If it were a public university, there’d be no point in taxing it.

  • Brett

    Tax exemptions for fully private universities does seem kind of weird.

    In any case, I laughed when I read about “voluntary contributions” that city governments hit up the local non-profits for. It reminds me of the “voluntary export quotas” that Japanese auto-makers were hit up with in the 1980s, because no one actually wanted to out-and-out say they were pushing protectionism.*

    * Of course, the Japanese had dirty hands when it came to Non-Tariff Barriers to trade as well.

  • Andrew Allison

    @4 Might I suggest that it is the power to discriminate with taxes which destroys.
    We need a flat tax with no exemptions OR credits. This would have the serendipitous effect of causing the denizens of K Street and a lot of lawyers and accountants to seek productive employment.

  • Gary L

    “The world is indeed comic, but the joke is on mankind.”

    – H. P. Lovecraft

    Brown University’s main literary claim to fame is that it maintains the principal archive of HP Lovecraft’s correspondence and writings:

    http://dl.lib.brown.edu/findingaids/ead.php?eadid=mslovecraft&style=eadbio.xsl

    Cthulhu (aka He-Who-Cannot-Be-Pronounced) is a totally scary dude, but our 2012 political reality suggests that this fictive horror pales before unfolding destinies of Iran, North Korea, Pakistan & Syria (to name only the four most egregious examples…)