Scott Van Voorhis
Greater Boston today has one of the hottest development markets in the country, with practically a new skyscraper or research lab around every corner. For a city that four decades ago was on the verge of joining the Rust Belt and becoming a glorified Lowell by the sea, it’s quite a comeback story.
But the Republican tax bill now winding its way through Congress would throw a wet blanket over a key driver of the Boston’s area success, affecting a bevy of powerful and elite nonprofit institutions.
It’s popular to praise the tech and biotech industries for leading Boston to the economic Promised Land, and they have certainly played a key role. Yet the secret sauce behind the Hub’s success, including all those new towers and lab complexes taking shape, can actually be found in its thriving nonprofit sector.
Boston boasts an outsized share of the world’s top academic, research and health care institutions, not to mention a bevy of wealthy foundations pushing myriad important causes, from reforming the city’s public schools to raising money for Alzheimer’s research.
This thriving nonprofit core has underwritten massive amounts of new development while also attracting some of the world’s top tech and biotech firms eager to roll out their own expansion plans.
Just take Kendall Square. Today it is practically the world headquarters for the life sciences sector, a budding Silicon Valley East.
All the brain power at MIT has obviously been a major draw. But MIT also helped lay the foundation for the spectacular rise of Kendall Square and East Cambridge, pumping hundreds of millions over the years into various campus and off-campus development projects.
And MIT is now forging ahead with its biggest development plan yet, a $1.2 billion effort that will further transform Kendall Square with another million square feet of office and research space and hundreds of apartments, not to mention new retail and open space.
Harvard is poised to play a similar role just across the Charles River in Allston, with plans for a $1 billion science complex – just the start of what will likely be decades of new development in the neighborhood.
Boston’s high-powered hospitals in the city’s Longwood Medical area and beyond have spent billions over the years on major renovations and expansions.
The building boom in Longwood – and all the new researchers and others going to work there now – has helped fuel a wave of new apartment construction in neighboring Fenway, including a ring of shiny new high-rises around the ballpark.
The MFA and the Gardner Musem have spent hundreds of millions more on their own expansions and renovations, while the ICA helped kick off development in Boston’s Seaport with its new, waterfront glass art palace.
Estate Tax Is The Real Killer
As President Donald Trump and Congressional Republicans hammer out a massive tax plan in Washington, they seem more than happy to throw colleges, hospital and other nonprofit institutions under the bus in the interest of ginning up a massive corporate tax cut.
A key element of the Trump/GOP proposal is doubling the standard deduction to more than $12,000 for an individual and more than $24,000 for a couple.
That may sound attractive on the surface, yet it would dramatically reduce the number of taxpayers who itemize deductions – including charitable contributions – from nearly a third now to a measly 5 percent.
The Senate plan would knock a point off the top tax rate, while the estate tax is being targeted for either elimination or a dramatic rollback.
While lowering the top tax rate reduces incentives for the wealthy to give their money away – as opposed to letting Uncle Sam take it – the real killer is the estate tax.
The estate tax has long been a big driver of charitable giving. Faced with seeing most of their fortunes scooped up by the federal government after the death of a patriarch or matriarch, the nation’s wealthiest families have long made huge gifts to colleges, hospitals, foundations and other nonprofits. But with an estate tax repeal, many families may choose to pass the wealth down to the next generation instead of giving it away to worthy causes.
Last but not least, the Republican tax plan also calls for a tax on the largest university endowments in the country, which would leave less money for Harvard and MIT to invest in ambitious development plans.
How much damage are we talking about? Nationwide, nonprofits and other charitable organizations could see a drop of more than $13 billion in giving, according to a study out of Indiana University. Locally, Boston area colleges, hospitals and cultural institutions could see a drop of more than half a billion dollars in contributions.
That’s real money and it could do real damage to the health of the nonprofit ecosystem that has been the source of so much of Greater Boston’s success.
