The Curse of Property Tax Exemptions
|November 2, 2013||Posted by Staff under Good Press|
Well-heeled universities receive huge implicit tax subsidies often for activities with little relationship to education. In New York City, for example, the tax benefit that Cooper Union gets from owning the land beneath the Chrysler building works out to $18,200 per enrolled student.
Of all the ways you can come up with subsidizing a worthy nonprofit organization, a property tax exemption has just about the worst incentive structure you can imagine. If you look at the list of things that churches and other religious institutions spend money on, “acquiring land and buildings” has got to be one of the least socially beneficial and worthy of encouragement. And the tendency of administrators and the fundraising-donor complex to plow more and more money into more and more buildings is something policymakers should be looking to restrain not encourage.
Property taxes encourage land owners to transform valuable parcels of land into high-value uses that generate useful economic activity throughout the city. George Washington University is using prime land at the corner of 20th and H NW as an open air parking lot.