[This one turned out to be a little long, but it should be worth the read if his stuff interests you. It's also a little out of order, so I'll be doing some retro-posting in the future. Enjoy.]
So I’m in Iowa today, and in Iowa there are only two things to talk about- corn and primary season. Well, the corn is everywhere, so there isn’t much need to discuss it, so that leaves Primary Season. It turns out that on the radio they play little snippets of all the major Presidential Candidates’ speeches so that the Iowa Caucus, who I’m told take their responsibilities as first voting state quite seriously, can get a real sense of what each candidate is about.
Today it was Sam Brownback, Republican Senator from Kansas. He launched into his plan for an alternative flat tax- that is, a regular, predictable tax, progressive, I believe, by income. This tax would lay alongside the old tax system which citizens could continue to use if they chose to. Brownback pointed out that in the old system, the rich pay much fewer taxes because of loop holes and deductions.
Now generally I could give a shit about tax policy. I guess I still look at it like they did in the old Boss days in New York- it’s basically a bribe you give the government to keep them off your back. But as I get older, or I should say as I have more political power than I did when I took my class on Urban History in the 9th grade, I have become more philosophical about taxes, though no less bored by them. As a trained classical musician, and as the sitting Chairman of the Board of my own 501(c)3 Non-Profit organization, however, Brownback’s passing scorn of ‘deductions’ caught my ear- but not in the way you might think.
Despite running my own non-profit, I am not particularly in favor of the concept of the tax-exempt status for certain organizations that ostensibly “serve the public.” That is the magic phrase that qualifies one as a non-profit organization- that one serve the public. Thus, Schools, Hospitals, Arts Organizations, Religious Organizations, and Environmental Organizations are all exempt from paying taxes and are able to receive tax-exempt donations (and in fact are often required to) from the public. So as a church owner, you pay no property tax on your church lot. As a school teacher, you pay no taxes on the erasers you buy for your classroom- or the chairs, video equipment, computers, microscopes, pencil sharpeners, dowels and construction paper, hockey equipment, or toilet paper. And as a Symphony Orchestra, you can solicit donations with the promise that all contributions will be tax-deductible. Also you get a discounted postal rate.
The government, then, passively assumes a percentage of the operating costs that you would normally have to pay were you any other “for-profit” organization- whether that organization made an actual profit or not. It is a form of subsidy to pay for things which the government considers to be a “public good.”
I have always taken issue with this concept, particularly regarding the arts. Is there a way that anyone could articulate – articulate – in which the public benefits more from hearing the Franck D minor Symphony more than from hearing “Oops, I Did It Again” live in concert at the Colloseum? I can’t think of one. The argument which I would expect to hear (though it holds only a few droplets of water) is that somehow the Franck Symphony is “better “ for you or is more “culturally” meritorious. Ignoring that those are standards impossible to define, we could also mention that the same Orchestra that performed the Franck also performed pop concerts at Tanglewood that summer featuring excerpts from Cats and an arrangement of a Frank Sinatra Song. Getting harder to discern cultural superiority here- especially when you move from Britney to Sgt. Pepper.
In the arts what non-profit really refers to is the fact that no one really wants to hear/see the music/opera/ballet/18th Century Baroque Sculpture exhibit. Or at least not in the numbers that would offset the incredible labor intensity required to put them on. What does it cost to put on an Opera, say at the Met? Let’s say about $150 - $200 per service for each player in the orchestra (conservatively). That’s 80 players, so $16,000 per rehearsal times six rehearsals plus 6 performances a week. Plus all the stage guys, plus all the lighting guys, plus all the costume guys, plus all the costumes, plus all the ushers, plus all the ticket takers, plus all the chorus members, plus the sets themselves, plus moving the sets, plus the truckers, plus the soloists ($25k per night maybe each), plus the conductor, plus plus plus plus. These quickly amount to about a half a million to one and a half million a night. They sell such and such number of tickets per night and that takes a bite out of their operating costs.
But even the most popular orchestra in the country doesn’t offset its costs by ticket sales alone. Their real bank comes from contributions. Big ones- from people and organizations who can’t wait to let it be known how classy and cultured they are. And this is the real issue for classical music as a non-profit- and the reason why the art will never develop so long as it remains protected from normal taxation: The people and institutions who give money to these organizations do not do so out of pure magnanimity (yes, Mr. Smith, you were right here too). Yes they do get the little tax break, but for most of them the more important gain is the social prestige of donating to something so sophisticated, so bettering as the Symphony- which could not survive but for their own noblesse. No, the masses alone would not support such treasures, so it is incumbent on the elite to subsidize it on behalf of the general public.
So despite the classical music industry’s professed desire to bring in young people, to bring in the general public, to make concerts more accessible, the hand that’s really feeding them benefits from them being elitist, snobby, and superior to the masses. If orchestras went ahead and delivered concerts that were appealing to regular people, then there would be no incentive for the Gottrocks’s of the world to donate to them- there would be no prestige, no cultural kudos. So the classical music industry is chasing its tail- and too often catching it- with large donations to create patronizing programs to ‘educate’ the public as to why the performances they don’t like are good for them. Perhaps they should take a lesson from the spinach lobby to see how much Americans like being told what’s good for them. I still haven’t seen a McBrussel Sprout platter behind the Golden Arches, and I don’t expect I will.
But what if we did away with non-profit status for the orchestras? What if we let them fend for themselves- give the people something they would want or just give up the ghost and move to Germany where the culture commands that people like what they are supposed to and not ask too many questions. Well we had an instance of this with my orchestra, The Wild Ginger Philharmonic back in the 90s. Let’s just say that people loved our concerts. There were people who disliked them too- but these people hated them - passionately (a reaction that would please any artist) - they didn’t just walk away without noticing or fall asleep. We had blue haired old ladies and blue haired college students and everyone in between standing in the aisles to hear us play. To one of our concerts a devoted fan invited none other than Brooke Astor, hoping to land us a fat check to get the endowment going. After the first piece he leaned over to Ms. Astor and said, “How can you give money to the New York Philharmonic after hearing something like this?” And that was the end of Wild Ginger’s relationship with Brooke Astor. She walked right out and never returned. We didn’t have to market to people or convince them that it would make them do better on their SATs. They came of their own volition, cheered with real heart, and made financial contributions from their own pocketbooks. But there was no reward of social status for their participation- only a great fucking time.
So for a while I have been considering the real value of non-profit-hood to the world of Classical Music. And while I had played with the idea, it was not until I heard Sam Brownback’s sound byte that I began seriously thinking about whether the same truths (as I saw them) were relevant to the other non-profit status beneficiaries.
So forgive the preamble, as I realize that I have not yet even posed my question regarding Mr. B’s tax policy- my question is- would there remain in his system any mechanism for tax-exempt status at all? Could people still get any deductions in his flat tax system, or would that be it? That’s my question. Right-wingers are notorious for their support for pulling funding for PBS, NPR, and the NEA. Would they really consider a wholesale removal of the concept of non-profit status in America?
Brownback himself is an ordained minister of some sort, so he is certainly involved with a certain sector of the non-profit world- the church. But anyone who follows modern-day Christianity knows that there is no shortage of funds flowing into the religion, and that the rise of the mega-church and televangelist has transformed the experience of Christianity from anything it had resembled previously- and in a completely American style (innovative, efficient, and without any style). In fact many of the modern churches are run on an entirely corporate model, based on giving the people what they want. You want meaning, purpose, direction, a way to raise your kids and keep them out of trouble? Buy God. And the membership is enormous. No hell and brimstone here, just community, emotional support, lots of music, and the occasional rapturous experience. Not bad for a few hundred bucks in membership dues- taxed or otherwise.
So perhaps Mr. Brownback feels the same way about ol’ time Religion that I feel about ol’ time Classical Music. I would not be surprised.
But religion was not my point of inquiry regarding exemption from tax exemption. It was one of my other favorite subjects, education.
Columbia University has an endowment in the billions. They are the largest owner of real estate in Manhattan. They’re doing fine. Yet not one penny of their real estate is taxed, nor are the capital gains from their investments. So they have benefited enormously from non-profit status. Were they taxed like a normal company, their liability would likely be 100s of millions of dollars a year. But instead it’s nothing.
Like other schools, they get the bulk of their capital from two sources- tuition and public or private contributions.
There are a few problems with this. First of all, the existence of tuition makes attending Columbia University an impossibility for millions of intelligent Americans- not to speak of third world internationals whose education might even be considered more important for global peace and prosperity.
Next, the bulk of public contributors make donations for the same reason as for classical music- the prestige of donating to something somebody deems to be important. (I will concede right away that there is an enormous amount of important research being conducted at universities. My point here is that it is not up to a democratic process to decide what makes these things important, and any academic can tell you there are tremendous amounts of waste in the Uni way of doing things. Fun or not, those are dollars that could be spent in other, more productive ways. But they won’t be, because there’s not as much prestige in many of those other ways. This is a longer discussion that aims at core problems with research and the scientific method. For another day.)
As for private donations, of the graduated who give back- and here let’s drop down a tier to a less prestigious College, say Sarah Lawrence- those graduate donors who are worth cultivating by the development office (and thus those who may have some influence in the school) will be only the most successful graduated, say 5 – 10 % of alums making significant contributions in the millions of dollars. So the monetary votes of those SLC grads working at Starbucks simply will not count- and with no cost to the school or impact on its curriculum, values, or methods. Only the rich’s voice will be heard, and presumably their voice will favor that which is already in place (with some tweaks), because that is what brought them to their state of richness The Starbucks barista might be angry and embittered, resenting the school that taught him nothing about life, but he would be in no position to do anything about it. Were he to bang on the door of the dean’s office, they would simply call security and have him escorted out. The people for whom the curriculum worked would have the red carpet rolled out with the credit card machine waiting at the other end. This makes the academic feedback process self-referential and self-reinforcing, thus impeding growth, innovation, and progress.
[NB: this point could be argued extensively, but it is not central to my case, and so I will leave it as is- food for thought).
Before I go on, let me state for the record that I waste little love on academic institutions in general and that I find the modern approach to education deeply, deeply flawed. It would be my hope that if my proposal to drastically reduce the voting age were to move forward, kids would soon enough realize that compulsory schooling of the sort we have now is not in their interest, and they would lobby to strike down laws mandating attendance in schools as well as laws prohibiting child labor (with some protections and provisions- of course). Free from the compulsion to attend school, serious, effective, and nurturing models of learning would be created spontaneously by those to whom education is most important- the young people themselves. But this is for another posting as well.
Back to the point.
My first impulse, then, would be that eliminating non-profit status for schools would be a good thing. But then who would pay for education? Would only those institutions with legacy funds be able to continue operations? That would be unfair to say the least, and it would contribute to real academic stagnation- not that there is that much competition between schools (another symptom of protectionist-ed fields)- the competition is dumped rather on the prospective students, vying for status and acceptance by institutions relying, again, largely on prestige to recommend them- a system I find perplexing and problematic.
It is worth repeating what one author, James Herndon, said about institutions: An institution’s first, and usually unstated, goal is self-perpetuation. Whatever is in their mission statement comes after that one. All the lofty goals of improving society, etc., come after paying the rent, the faculty, and the bureaucracy that runs it. Forgive the cynicism here (I’m quoting a cynical author), but few Americans can afford to work productively for an institution that has a sunset clause built into its mission. People have tended to want to keep their jobs as long as possible, at least if they are expected to commit real effort and energy to them.
So it is not hard to see how this arrangement can easily conspire against the interests of the students, the ones whose interests the institution ostensibly serves. The best teachers, after all, are the ones who make themselves obsolete- they convey their information, they teach the students how to learn for themselves, and like so many male arachnids, their task completed, they simply expire. Since most professors don’t want to expire, there is a natural power struggle built into the teaching relationship (a parallel exists in any inter-generational relationship, including parent-child) in which there is an incentive in the teacher to prevent the student from achieving intellectual independence, as such independence would render the teacher obsolete=powerless=dead. Whether this is enacted overtly (as in music conservatories) or more subtly (as I expect would be the case in liberal arts schools), it is a fact of human nature that must be dealt with in a society.
(Indian culture tends to deal with this religiously, as teachers see themselves as vessels for information flowing from the gods, their reward is a certain amount of prestige and social deference. But in America, we have no such thing- or only very little of it. We don’t want societally granted prestige- we want money, with which we can buy prestige on our own.)
So how to we generate a system of education that is genuinely student centered?
Easy. And no need for tax breaks, at least not for the schools.
Higher education (let’s start with that) would be absolutely free of charge to students.
But there would be a contract. Upon graduation, or shortly after, a small percentage (say ½ a percent) of the student’s annual income (salary) would go to back to the school until retirement, say 70 years of age
This system would inextricably link the life interests of the student with the financial interest of the schools.
In the current system, once the student forks over his tuition, the school is under no obligation to do much of anything. They can teach Ping-Pong for 4 years and call that an education (or Art History, perhaps). But under the new system, schools would have to think seriously about the entire life future of the student- starting with the basics: If the student drops dead at 35 by eating too many Big Macs, the school has just lost 35 years of income. Therefore basic life skills would factor heavily into the initial curriculum. 4 or 5 failed marriages can drain the coffers pretty quickly too and cause bankruptcy. How about general life skills about building relationships- and not just the fruity new age kinds. Schools would have to do research (on their own dime) to find ways of getting along that really work for people, and they would have to find ways to teach those ways effectively to their students.
And then the whole manner of teaching changes- how things are taught, what is deemed important is no longer ‘deemed’ but is discovered- if reading Chaucer adds enough to one’s quality of life that it allows for more productivity and more income, then Medieval English would be a good investment. Otherwise, not so much. Note: I am a firm believer in the value of leisure, reflection, and learning for learning’s sake. Presumably the proportional value of this would be factored in to a school’s calculus.
A school that taught the students nothing useful would receive nothing useful (i.e. dollars) in return and would fold. A school like Juilliard that graduated hundreds of Starbucks baristas would be entirely bankrupt, unable to function. If they wanted to raise money, they would have to demonstrate the worthiness of their mission- and do so without the tax-break incentive to donors.
The same would go for research institutions. Research is indeed valuable to society, and factored into that ought to be a certain amount of inefficiently spent time. But this money can be raised separately from the education funds. Generally student research is a form of slave labor, pardoned by the prestige and sophistication of the work they are doing and the institutions that permit it. So another system would need to be in place.
Eventually, schools would be competing amongst themselves for the best high school students (if such a thing still exists), very much the way the virtually-for-profit football wing of the school already does.
Prospective students would also think seriously about whether or not college was a useful option for them. Could they learn as much on their own without being indentured to Harvard for the rest of their lives? Right now there is virtually no choice for a promising 18 year old than to spend $100,000 to be taught by graduate assistants for 4 years. Why not turn the tables and empower the student- on whose fortunes the collective depends far more than the institutions themselves.
Economic prejudice would also end with this system, as less well to do families would have the same opportunities as wealthier families. This would also contribute positively to racial and cultural integration. Business works best when it is color blind, and this would indeed be a business relationship.
Another positive effect of this system would be that high school “education” would be less concerned with "getting into college” than real life excellence and utility. Again, de-schooling the culture would have a significant positive effect on all of this.
Also, instead of a fixed percentage being given back to the school, other arrangements could be made: perhaps a Medical student could defer back payments until he was 35 but pay a slightly higher percentage. There could also be some sort of buy-out arrangement for the ultra rich. Presumably a four year college education is not worth ½ a percent of a CEO pulling seven figures each year. Some sort of figure could be agreed on in advance to release the student from his obligation to the school.
The flip side would also need to be taken into account. There are many (and ought to be many) who pursue a career out of love for their field with the predetermination that they will live a modest life. I personally believe that this thinking is unnecessarily limiting, and that even someone who enjoys sea horse biology can still find a way to become wealthy given the right frame of mind. So I leave this to others to ponder. Perhaps remnant specialized, not-yet-profitable centers could be in place to accommodate such people. Or some cut of the 1/2 percent would be used as a kind of ‘tax’ to even the playing field for those choosing less profitable professions.
Now, could the system be corrupted? The short answer is- very likely. Research could be distorted to push students towards excessive financial achievement at the expense of personal happiness. Financial gain is hardly the only measure of life success, and there would need to be some system in place to assure that quality of life be valued appropriately (although this has generally been an issue skirted by American Institutions “What defines Quality of Life, anyway?”). Again, in the long term, schools found to be abusing the education of their students would see a drastic drop in attendance (remember, they’re competing for students, not the other way around), and any temporary gain would not be worthwhile. A smart school would therefore set up effective checks on the power of its administrators.
I believe that the teachers’ salaries should be directly tied to the school’s annual financial gains. So that each teacher receives a certain percentage of the school’s annual earnings. The difficulty with this is that teachers would not realize the rewards of their effort until 20 – 40 years after those efforts, so some alternate system would need to be put in place. Perhaps the teachers could be paid an estimated rate and in twenty or thirty years be required to give a refund – not to go below a certain amount – or be given extra funds if their students turned out to be especially successful. This would be a little more complicated, but if there were certain guarantees, then it might work. Perhaps a better system could be worked out.
If this system seems too restrictive – in the sense that it views education as simply a means for making money in the narrow free-market view of the world – then perhaps some 20 % of the education would be required to be reserved for. . .Art History, Chaucer, whatever. The money to pay for it might even be able to be collected from the students themselves or through some kind of donation system. But a strict cap would have to be placed on what percentage of the budget could be used for school-reimbursed time.
The other non-academic aspects of College life could be outsourced so that the students participate as real workers in research facilities or as part of a volunteer book club, chess club, fencing team, etc. The truth is only people with adequate money will be able to devote serious time to these other activities anyway. So it will be the rich who can afford them and the rich who would be able to send their kids to liberal arts college, where they would have done these activities otherwise, anyway. Those who make adequate money through the new system will be able, later in life, to pursue ‘extracurricular activities’ with more freedom, having become wealthy themselves.
That’s the start of the plan, anyway. There is no doubt much to be argued about, but this should get the ball rolling on a discussion.
So thank you, Mr. Brownback for causing me to contemplate the value of non-profithood for those outside my own industry. I probably won’t vote for you, but your candidacy has already been of service to my imagination.
