Boston tries asking nicely for more taxes

The John Hancock Tower sits in the heart of the Back Bay neighborhood in Boston, Mass.

Kai Ryssdal: Nonprofits in this country enjoy a special privilege under the tax code. As in, they don't have to pay. Tax-exempt is the official phrase.

But with city budgets stretched ever thinner, it may be a dwindling perk. Boston is asking some of of its nonprofits, universities, hospitals and museums to bear more of the cost of city services.

From the Marketplace Education Desk at WYPR in Baltimore, Amy Scott reports.


Amy Scott: Boston is covered with colleges and hospitals: Harvard, BU, Mass General. More than half the property in the city is exempt from taxes.

Starting this summer, Boston will ask many of those institutions to pay up to quarter of the property taxes they would pay if they weren't tax-exempt.

Ron Rackow is commissioner of the Boston Assessing Department. He says property taxes cover more than 60 percent of the city's budget.

Ron Rackow: So when you have a large percentage of that property base that's exempt, it puts a lot of pressure on the remaining businesses and residents to pay for services.

So-called payments-in-lieu-of-taxes are fairly common. Many of Boston's nonprofits already make voluntary payments to offset the cost of city services.

Greg Ingram heads the Lincoln Institute of Land Policy. He says universities have some good reasons to pay.

Greg Ingram: They're very concerned about the security of their staff and their students; they're concerned about the sort of general ambience of the neighborhood.

Some worry the idea will catch on in other cities. Tim Delaney is president of the National Council of Nonprofits. He says nonprofit budgets have been hit just as hard as city budgets.

Tim Delaney: So by having policymakers now turn to nonprofits saying "give us money," is just going a bridge too far.

The payments are still voluntary. To encourage cooperation, the city plans to publicize how much each nonprofit has been asked to pay, and how much it coughs up.

I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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