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Post by robeiae on Apr 12, 2017 15:03:50 GMT -5
www.realclearpolicy.com/articles/2017/04/12/subsidizing_the_ivy_league.htmlSome highlights from a pretty impressive list: Eighteen million on lobbying? For colleges? What's that about? But you know, it's the not-for-profit stuff that really gets me: What up with that noise? They're turning profits left and right. They should be paying the same taxes as everyone else, imo (also true for every other college out there).
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Post by celawson on Apr 12, 2017 15:49:29 GMT -5
As a parent who is currently paying a very large college tuition bill for my daughter, that disgusts me.
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Post by Christine on Apr 12, 2017 17:21:17 GMT -5
But you know, it's the not-for-profit stuff that really gets me: What up with that noise? They're turning profits left and right. They should be paying the same taxes as everyone else, imo (also true for every other college out there). If the funds, and gains from invested funds, are used for qualifying nonprofit activities, they're not "turning a profit." Profit vs. nonprofit IRS classifications are made based on types of activities the funds (and gains) are used for, not whether gains are realized in the process. I mean, if you believe there should be no such thing as nonprofits, fair enough. But currently, nonprofit entities are allowed to invest funds until they're used for nonprofit activities - education, art, etc. Would you prefer they dig a hole in the earth and put the money in there?
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Post by robeiae on Apr 12, 2017 18:56:44 GMT -5
I mean, if you believe there should be no such thing as nonprofits, fair enough. That is exactly what I think, especially when such entities are obviously increasing their worth by using the non-profit designation to their advantage. I understand the IRS classifications completely. The whole point here those classifications are just a way for some to game the system.
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Post by Christine on Apr 12, 2017 19:35:25 GMT -5
I mean, if you believe there should be no such thing as nonprofits, fair enough. That is exactly what I think, especially when such entities are obviously increasing their worth by using the non-profit designation to their advantage. I understand the IRS classifications completely. The whole point here those classifications are just a way for some to game the system. I'm sorry but your terminology is wrong, again. Nonprofits do not have "worth." They do not have shareholders, members, or owners. You can't invest in a nonprofit. (You can donate and get a tax deduction, but you can't invest and get a return.) Nonprofits have funds, to be used for nonprofit purposes. Literally, on the balance sheet of nonprofits and governments, assets minus liabilities are called "funds" - restricted and unrestricted - NOT equity or retained earnings. Because it doesn't belong to owners. It is to be spent for charitable purposes. There are no dividends or distributions. You can't sell a nonprofit for a profit. You can argue, and I probably won't disagree, that board members' salaries are too high, that funds aren't being spent the way you'd like to see them spent, or that activities like education or art or religion don't deserve nonprofit status. But you're mischaracterizing the problem(s) with faulty terminology. And I'm just that annoyed with you in general to point it out.
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Post by Don on Apr 13, 2017 3:31:19 GMT -5
IOW, equity isn't equity if the law declares it so.
So the Catholic Church is technically "worthless" since "nonprofits don't have worth." Guess that makes the Vatican a hovel that should be condemned.
Massive amounts of cash paid out to "executives" who are nominal owners, but labeled" salary" aren't profits.
Same trick they play with theft and taxation. I get it. I really do get it now!
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Post by Don on Apr 13, 2017 3:44:17 GMT -5
Back on topic, there's nothing new here. Rulers have long stolen from their subjects to finance the intelligentsia that in turn support the consolidation of power in the hands of those same rulers (rebranded as "wise and benevolent leaders) who will guide all of society forward into a bright and shining future.
Back then it was called "The Divine Right of Kings." Today it's called "Democracy."
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Post by robeiae on Apr 13, 2017 6:47:51 GMT -5
But you're mischaracterizing the problem(s) with faulty terminology. No I'm not. I'm just not speaking in IRS/accountant speak. The endowments of these schools have worth/value/however you want to say it. And they don't have to worry about paying taxes on their gains. That's the "problem." I'm not mis-characterizing it at all. If you think that's okay, fine. I don't. Nor do I think all of the money these schools spend is for "charitable" purposes (lol). Look, I'm not suggesting that they're doing anything illegal, that they're breaking any rules. I'm sure they're not, anymore than is UltraMegaCorp when it does all it can to minimize it's tax burden (and maybe sometimes ends up without one). I just that don't think they should get a pass on taxes that everyone else has to pay. I don't really give a shit if they imagine that they're doing "charitable" work.
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Post by robeiae on Apr 13, 2017 6:51:21 GMT -5
Back on topic, there's nothing new here. Rulers have long stolen from their subjects to finance the intelligentsia that in turn support the consolidation of power in the hands of those same rulers (rebranded as "wise and benevolent leaders) who will guide all of society forward into a bright and shining future. Back then it was called "The Divine Right of Kings." Today it's called "Democracy." Well, I wouldn't put it in such flowery terms, but yes that is kinda the suggestion I was making: the Ivy League supplies a lion's share of the "rulers," as it were, people in power throughout government. So thay tend to get their way, I think, on issues where they can benefit.
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Post by Christine on Apr 13, 2017 7:24:39 GMT -5
IOW, equity isn't equity if the law declares it so. Not the law so much as Merriam Webster. "Equity" is an ownership interest. Who "owns" a nonprofit? But you're mischaracterizing the problem(s) with faulty terminology. No I'm not. I'm just not speaking in IRS/accountant speak. The endowments of these schools have worth/value/however you want to say it. And they don't have to worry about paying taxes on their gains. That's the "problem." I'm not mis-characterizing it at all. I think you are. Worth/value to whom? Who represents "their" above? You speak as though the nonprofit itself is somehow benefitting from investing funds. Who receives/benefits from the gains? The public does, assuming everything is on the up and up - which I wouldn't assume, but that's a different issue. You seem to think the government should tax any gain generated by a nonprofit(taxes which would presumably be spent on the public) before it goes to the public. Side note, my personal pet peeve is with churches and other nonprofits to the extent that they are not doing charitable work, only "spreading the gospel," hanging out in big fancy buildings, playing golf, whathaveyou. To the extent that churches and any other nonprofit behave like clubs, donations to those clubs should not be tax-deductible, and net income derived by those clubs should be taxed.
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Post by robeiae on Apr 13, 2017 7:53:06 GMT -5
"Their" refers to the individual schools, obviously I thought. Who else could it refer to? And I'm sorry, but "the public" does not receive the benefits from the growth of, say, Harvard's endowment fund. Harvard--the school--receives the benefits (insofar as a defined portion can be spent each year). But even if one imagines that this translates to the public in general, I still don't see why the investments therein shouldn't be subject to the same taxes as other investments. The managers of endowment funds chase growth, just like any other investor. It's not like they only invest the monies in noble causes. And speaking of Harvard, this is what happens when that growth-chasing isn't top drawer: Oh, and the new chief exec for Harvard's endowment fund has a guaranteed salary of $6 million a year. Better returns mean bigger bonuses. And I think that's fine, really. It is what it is. But it makes it clear, this all about making more money. So pay the taxes everyone else pays. What's the big deal?
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Post by Christine on Apr 13, 2017 8:03:12 GMT -5
A church holds a bake sale. The cost to make a cookie is $0.10. They sell each cookie for a $1.00. The gain from each cookie is $0.90.
That is about making money, right? The proper question is, what is the is money spent on, not, are they trying to make more money?
I don't know enough about what this Ivy League actually spends money on, and I'd likely agree with the rest of your objections, fwiw. But I still maintain that you are looking at the investment aspect of it, and the "worth" of nonprofits in general, in the wrong way.
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Post by Don on Apr 13, 2017 8:57:00 GMT -5
Who "owns" a non-profit? Legally, nobody, I suppose. That's a far cry from assuming that the gains to that entity somehow produce benefits to the general public.
A much more important question is Cui Bono. Six million dollar salaries lead me to disbelieve the "good of society" mantra.
Then there's the whole "good of society" shark to be jumped. Who decides that one organization's activities will benefit society, but another organization's won't?
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Post by Amadan on Apr 13, 2017 17:04:57 GMT -5
Sigh. Christine has a point. "Non-profits should not exist" (or rather, should not enjoy tax-exempt status) is an entirely separate argument from "Ivy League schools (or other non-profits) are mismanaging their funds" or even "Ivy League schools should not have tax-exempt status."
I think you are reacting with emotional indignation to the fact that Harvard and its alumni are obviously very, very rich so it sort of rankles that they have this huge endowment that doesn't get taxed. But, in theory, it is there to provide for non-profit educational services; it does not pay dividends to shareholders.
To the degree that it's actually being used to pay huge salaries to its administrators, that's not fundamentally a different problem than church pastors buying private jets, or Red Cross administrators being paid lavish salaries.
One can believe (or not) that charities and/or churches should receive preferential tax treatment independently of whether or not any particular one is actually a good steward of its donations.
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Post by robeiae on Apr 13, 2017 17:16:00 GMT -5
For my part, I'm not arguing that the schools are mismanaging their funds. Or even that they should not--specifically--have tax-exempt status. I don't think any org should be tax-exempt, mostly because everyone--every person, every business, every org--benefits from the things the government provides. And those things are paid for with...taxes.
And I'm not emotional nor indignant. Really, the issue of churches--and especially "churches"--gaming the system rankles me far more than universities doing it.
But the larger, more general point here--for me--is the one Don touched on: the benefits garnered by this limited group of schools suggests some favoritism, given the background of so many powerful people in politics. And hey, it's the same sort of thing with Wall Street, as well.
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