Taxes are power struggle between town and gown

Yale and its critics — those of the “Connecticut Center for a New Economy ideology” that Yale is the tubby oligarch with an oversized money bag in a Gilded Age political cartoon — sometimes seem to exist only to prove the phenomenon of deja vu. After last fall’s strike, and now the recent debate over Yale’s noncommercial property exemption (quashed for the moment by the state legislature, but to be continued), even first-year Yalies may feel they’ve exceeded their tolerance level for substanceless quarrelling between town and gown.

Not even its loudest critics want Yale to leave New Haven, they just want it to be a better member of the community. The irony of the effort to remove the property tax exemption for Yale’s nonacademic buildings is the same irony of last fall’s labor stoppage — can you legislatively or contractually force somebody to be a better member of the community?

But first the numbers. Between the Homebuyers program ($15 million a year), Yale’s voluntary tax contributions, tuition payments for children of University employees, sponsorship of local biotech development, and hospitality to events like the Arts & Ideas Festival, Yale’s contribution to the city far exceeds the $12 million or so that represents the gap between Yale’s property tax exemptions and PILOT reimbursements. When you factor in a thousand faculty members (granted, not all of whom live in New Haven) pumping hundreds of thousands of dollars in property taxes into city coffers; the buoy effect Yale has on commercial rents around the University, and the patronage of Yale students and faculty at businesses on Broadway and Chapel, Yale’s contribution to the city would seem to dwarf the demands of its most vociferous critics. (This is not to mention the daily presence of Yale students as tutors in New Haven’s schools, the visitors and prestige Yale brings to the city, and literally hundreds of other contributions impossible to quantify.)

Meanwhile, the tax exemption recently debated in Hartford affects a small number of low-income Yale properties like some medical research buildings and Ingalls hockey rink. Commercial properties like the Yale golf course are already taxed.

None of this should be interpreted to mean that Yale’s critics are somehow wrong in demanding that Yale do more. But the critics fail to understand that when President Levin doesn’t return Scott Marks’ phone calls it’s not because Yale is a bad neighbor. Yale likes doing its own thing so much that it’s willing to go to the trenches to defend its right to give more voluntarily than it would through mandatory property taxes, rather than make its critics happy and admit it’s just another big corporation (and should be taxed accordingly). So who’s wrong in this confusing situation?

One theory is that whichever party is so wealthy that it can give out tens of thousands of dollars every year in dubious Sudler funding must always be in the wrong. If this is an unfair slander; that’s the whole point.

New Haven vs. Yale is all about who gets to define fairness and thereby make unfair slanders seem fair. It’s a hotly contested right because fairness is such a moving target.

Since the viciously divisive 10-week strike of 1971, Yale and the unions have been a couple of peacocks, flapping their dowdy feathers, engaged in perpetual combat for the right to move the goalposts of righteousness half an inch at a time.

Consider last fall’s strike: the full-page ads in the Register, Dwight Chapel teach-ins, the administration’s e-mails to the community became so much about “working the refs” and so little about substance (the final agreement basically averaged the “final” offers before the strike) that finally the mayor stepped in to help put a stop to all the Machiavellian nonsense.

Now we’re arguing whether Yale’s 1834 tax exemption is so unfair that it requires discriminatory state legislation that singles out Yale’s exemption from all the other dubious exemptions and loopholes in the state’s tax code. And supposedly it’s unfair for Yale to tout its voluntary programs as proxies for property taxes because property taxes are fundamentally different than other kinds of contributions — tutoring is great, but it doesn’t help the city pay its bills.

It is hard to discount the rhetoric and realize that this debate over fairness is about power, not about money. The University could play a shell game — submit to tax assessment on all its properties, and cut its other community programs accordingly. This is what big corporations do. The Wall Street Journal is fond of saying that corporate taxes always end up being consumer taxes, but the issue transcends that. John Marshall was getting at the real issue here when he wrote (in perhaps the most famous decision in Supreme Court history) that Maryland could not tax the U.S. national bank because the power to tax was the power to destroy. He thereby established the supremacy of the federal government. In a place like New Haven, it’s not always clear who is the alpha male — the city or Yale. Taxes are a way — sometimes the only way — of establishing the pecking order.

Yale’s critics have their problems — they don’t really seem to appreciate that Yale actually has an educational mission that transcends its corporate identity, and they do not understand the impossibility of contractually making someone a better member of the community. But it should be remembered that Yale’s critics are not necessarily its enemies. They accomplish little in terms of increasing Yale’s consensual obligations to employees and the city, but they actually vastly increase what Yale is willing to do voluntarily just to show how beneficent it is.

As a rich University in a poor city, Yale pays a hidden tax — the constant bleating of its critics; this is in fact the tax that matters most, because it keeps Yale motivated to remember its milieu. If its critics lightened up a bit, I suspect the University would repay their kindness with a voluntary dispensation of goodwill, as they have continued to do with graduate student stipends. If only they didn’t make students feel like pawns in a game, it would almost be possible to believe that was the critics’ secret purpose.



Aaron Goode is a senior in Calhoun College.

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