Giorgio: The Real Real Estate Tax Problem in Worcester

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Wednesday, December 10, 2014

Paul Giorgio, GoLocalWorcester MINDSETTER™

Last night the Worcester City Council set the tax rate for the upcoming fiscal year. And each year homeowners are pitted against business leaders during the tax rate battle.  This is a fight that neither can win. The arguments are the same year after year.  The business owners claim that the dual tax rate system is driving business out of the city.  Home owners on the other hand claim that they cannot pay more and that business can pass any increase on to their customers.

Neither argument is fair.  The truth lies someplace in the middle as it always does.  Worcester never should have created a two tier system.  We cannot compete with neighboring towns when it comes to taxes, either residential or commercial.  If a business is making a location decision solely on the tax rate, then the towns will win.

It is time that the business community and the residential community work together.  If the business tax isn't fair, no business will locate in Worcester and if the residential rate isn’t fair, no one will want to live here or can afford to live here.

Nonprofits-the real problem

The real culprit in the annual tax rate drama are the not for profits who are exempt from paying real estate taxes.  About one third of Worcester’s property is exempt from paying real estate taxes because they are nonprofits entities and thus exempt from the onerous duty of paying their fair share, something the rest of us must do, whether we are a home owner or a business owner.

Who in Worcester is exempt from paying real estate taxes?  Let’s start with the big boys & girls-the colleges the next biggest group is hospitals. Not all hospitals mind you. St. Vincent Hospital is a for profit, while UMASS is a nonprofit.

Churches and their sundry accessories such as housing developments don’t pay taxes. Most nursing homes don’t pay taxes. Large social service agencies with hundreds of employees don’t pay taxes.

So who does? The average working man or women who owns their own piece of the American dream- a house pays real estate taxes.  The small business owner, who may own a restaurant or a plumbing supply store or a corner convenience store, pays taxes.

It is estimated that approximately $1 billion worth of Worcester real estate goes untaxed.

If we just collected $6 million dollars from the nonprofits, none of us would have to pat additional real estate taxes this year.  That’s correct-homeowners would not pay more and business owners would not pay more.

What is the argument against them paying more-they claim they can’t afford it.  We are talking about some agencies that are paying their CEOs hundreds of thousands of dollars a year in salaries.  Not that they don’t deserve it.  But if you perform like a big business it’s time to step up to the plate and pay taxes like a big business.

Nonprofits receive city services

What do homeowners receive for services that the nonprofits don’t get?

Do nonprofits have the benefit of police and fire protection? Yes

Do nonprofits have the benefit of good schools for employee’s children? Yes

Do the streets get plowed in front of nonprofits? Yes

The only public service that nonprofits don’t receive is trash pickup.  But then again condominium owners who pay taxes don’t get city trash services, nor do apartment buildings that pay taxes.

What are the arguments against nonprofits not paying taxes?

They say, we are poor and can’t afford it.  This is not true.

We do good for the community.  Yes they do, but all the good they do is paid for by government and other nonprofits that don’t pay taxes.

It is time for nonprofits to care for the common good.  They need to step up to the plate and start paying something to the city they are in.

Paul Giorgio is a longtime Democratic Party Activist who has worked on numerous campaigns. He was a Lead Advance Person for President Clinton & Vice President Gore. He was Deputy Director of Special Events for President Clinton’s first Inauguration. He has been elected a delegate to numerous Democratic National Conventions and recently served as one of President Obama’s representatives on the Platform Committee. In 2013 he was chosen as a Presidential Elector. He is the President of Pagio, Inc., publishers of Pulse Magazine, Vitality Magazine and Worcester Medicine.

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