“Representation without Taxation”

Yes, I meant the title the way it is written.  You may remember our Patriots of the 18th Century using the battle cry of “No Taxation without Representation” against the British.  Well, we have exactly the opposite happening today.  We have a lot of VERY WEALTHY organizations who pay no taxes.  At the same time, these organizations have Representatives and Senators who “represent” them very well – much to the rest of our detriment.

So who am I talking about?  Three types of organizations – hospitals, universities/colleges and churches.

“But wait”, you might say.  Those are all “non-profit” organizations.  They don’t make profits, so there is nothing to tax.  Interesting how that works.  As is the case with so many phrases that come from a bureaucracy the phrase “non-profit” doesn’t mean what it sounds like:

“Non-Profit” does not equal “I don’t make profits”.  It simply is a taxing declaration.

“Contrary to their name, nonprofit organizations can be and often are highly profitable,” notes a report from the Institute for Research on Poverty. “They are restricted not in how much income they can generate, but rather in how it is distributed. Profit cannot be paid out to owners or anyone else associated with the organization: it must be devoted to the tax-exempt purpose of the organization. It is the profit motive, therefore, not the profit itself, that is restricted.”

So, a University can pay its football coach $7 million a year (evidently that is the “tax-exempt” purpose of a college).  They can provide the coach and the President of the University with a private jet to do all business travel as well as some personal travel.  A hospital can keep buying new land, build new buildings, buy the latest equipment without regard to whether that best serves anyone (if one hospital in town has the latest XYZ machine to treat one type of disease, must the other hospital in town have one also?).

Any college or hospital can make as much money they want and not pay a cent of income tax.  So these organizations can spend their profits basically however they wish and not be taxed.

It gets even better.  University endowment funds – their investments – are tax free (interestingly, the dictionary defines an endowment as a “permanent fund or source of income”).  What is the financial impact?  For example, Yale has an endowment of approximately $24 billion.  Its endowment has averaged a 11% return the last ten years.  They have avoided taxes on over $2 billion of income per year. Yet Yale paid its investment advisers $486 million last year to manage its endowment.  Lets just say they could pay that much in taxes.  How much money is that?  Enough to provide free tuition to 100,000 students to go to Sinclair, every year.  Or every undergrad student at Ohio State would have their tuition reduced by $12,000 every year.  Remember that these figures are simply funds paid out of the profits from Yale’s ENDOWMENT fund.

And to put the cherry on top, Universities (and hospitals) do not have to pay property tax. It is estimated by the Santa Clara County Assessor that Stanford University received tax exemptions on their property worth $8 billion.   Generally all of us pay $100-$500 at least per $100,000 of property value.  Wouldn’t it be nice to be able to avoid that? Every university, college and hospital does.  Anyone notice how much property Kettering Health Network and Premiere Health are buying and building on around the Dayton Area?  All untaxed.

Keep in mind, universities receive additional federal money in the form of Pell Grants, subsidized student loans and other benefits.  So they don’t pay any taxes but they get benefits from the Government.  Isn’t that the complaint against “welfare recipients”?

The whole idea of allowing hospitals and Universities to be tax exempt is that they are “charitable” organizations – helping the public.  This is a vestige from the earliest days of the country, where colleges and hospitals needed to be created and the capital was not available in our new country.  We have long passed that stage.

I won’t even get into it about churches.  But keep in  mind, ANYONE can “create” a church and gain tax exempt status simply.  Even better, according to the IRS, “Congress has imposed special limitations, found in section 7611 of the Internal Revenue Code, on how and when the IRS may conduct civil tax inquiries and examinations of churches”. Isn’t that convenient (a nod of the head to The Church Lady)?

I wonder why our politicians don’t look into this more rigorously.  Where are the Patriots of ’76 when we need them?

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Frames

I was reading about the concept of “frames” in our daily thinking.  In this context, frames are expectations and assumptions we bring to interpreting information and situations.  Frames can be around words such as “men are more aggressive” or “youth is wasted on the young”.  Frames are also contextual. Think about the attitude we carry when we walk in a strange place at night and see people different from us walking towards us.  We usually “frame” this situation as a potential for danger.  We become more anxious.  We might feel our adreniline kick in a little.  We might start looking for a way around the situation.

In many ways, frames are vital for living.  They are useful in that they produce norms.  We’re reassured by assumptions that our bodies will continue to breathe, that others will drive on the right side of the road, that our computer will not burst into flames, that water will come out of the faucet.  Imagine frames as the thing that allows us not to be distracted by routine functions and interactions.

Frames are typically unconscious, more than we imagine.  They are often below our level of awareness, making them difficult to identify and harder to change.  The dictionary defines a frame as a “border or case for enclosing a picture”.  Think about that.  It deliberately  – for good reason in this case – restricts or encloses your view.

I am interested in how we use frames to define ourselves.  It might something like thinking, “I am no good at math” or  “I could never do that”.  It might be an action (or inaction) such as staying in a job you hate because you cannot see a future different from the current one.  Seeing yourself as someone who doesn’t do well in crowds or social situations. Deciding someone else must be the expert, so you will do what they say or follow their lead.  All of these restrict your views.

Those are all frames that we use on ourselves.  Person in a frame

The interesting question to ask is if you are happy with the frames you are putting around YOU?  It seems to me that growth cannot come from a place where a frame is present.  The second interesting question to ponder is what do your frames look like?  Are they all plain colored?  Do you ever frame part of yourself in a bright, large, ornate frame?  Do you have an unfinished frame or one that can be expanded?

How a wedding helped to teach me another lesson

My son, Stephen, got married on Saturday to Mallory Schenk in Westerville, Ohio.  It is a time for great celebration and we couldn’t be happier.  I have two observations about this day.

First, the wedding is one of those rare occasions where I got to see at least some members from all sides of my family.  Too often now (as we get older), the only times we get together are for funerals.  This is a happy occasion that brings together a lot of family members.  Heck, it is hard enough just to get the six members of my family together at one time.  Awesome.

Second is that I learned something again.  As the father of the groom, my responsibilities were very limited.  As a male, and a person who is typically not a “meddler”, I really didn’t have a lot to do or worry about as far as wedding preparation.  Show up on time.  Be dressed nicely.  Support everyone.  Keep out of the way and do as I am told.  Pretty simple game.  I’ve seen that Rose is really wrapped up in things and “anxious” that things go right.  It took me a while to really understand things, but I finally got the picture.

Mallory and Stephen really put a lot of effort into this wedding.  Seemingly endless plans.  Long time to plan it all out.  A lot of  effort, passion and attention on the ceremony and the reception.  At first, my “logical” and “organized” brain was thinking, “why are they putting so much into this?” .  It is there wedding, but no one will remember if every detail comes out right.  It is the occasion, not the specific events that matter.  Keep it simple.  That’s my logical brain at work.

Okay Mr. Logical, that makes sense – sometimes.  But just like Steve Jobs making the first iPhone at Apple, “simple” and “good enough” is not the goal.  Enduring, wonderful memories.  An event that goes off clockwork smooth and fits a picture in Steve’s and Mallory’s minds of what is the perfect wedding.  THAT is the goal.  Similarly, Jobs was adamant in making sure the iPhone was the best it could be before it got released.  He was well known for being demanding, exacting, and making sure every little detail fit into place.  The iPhone could have been released without the final touches.  It probably would have been successful.  But it would not have fit Jobs’ vision – he would have always seen it as flawed and not a full effort worthy of his company’s name. Steve and Mallory wanted a wedding in Job’s mold.  It needed to fit their vision (not my Mr. Logical vision).

And that is what really matters.  And a good lesson for me to learn (again).

“Uncle Finny Money”

I recently received a nice small inheritance from my Uncle Finny, one of my dad’s brothers. Uncle Finny was as unique of a character as there every was. He was an Army veteran from World War II. After settling down in Louisiana, he became a jack of all trades. He owned a car wash. He had a large farm. He had an oil well on some land of his. He collected “stuff” and stored it in a couple of barns. He was the kind of person who would drive by a house, see stuff piled at the curb, load it in his truck and take it back to his barn.  You never knew what treasurers (or trash) he would come up with.

But WAY more important was what he was to his nephews and nieces growing up.  My family would go on vacations twice a year to visit all of my relatives in Louisiana (I had over 100 cousins there).  At some point, we always visited Uncle Finny at his house.  Uncle Finny had no children, but he sure liked to spoil them!  We would get to his farm, and he made sure we knew to go into the freezer to get ice cream sandwiches.  He would show us where the Coke was.  He made sure we saw the drawers full of candy, cookies, cupcakes and other treats.  His goal was to spoil us and to make our parents mad. To a kid, having unlimited treats was the best!  And Uncle Finny got such joy out of seeing us enjoy the treats and our parents’ frustration in not being allowed to stop us.

So now, I have this bit of money from Uncle Finny.  I’ve been thinking, What do I do with the money?  I could buy a new dishwasher with the money. Or perhaps get new kitchen granite counter tops. Or save the money for retirement would be a possibility. We want to upgrade one of our bathrooms, so we could do that with the money.  All of those are practical and meet a goal.

But none of those options would be appropriate for “Uncle Finny Money”. I’ve come to realize quickly that the money has to be spent on some experience, something memorable. That is what would honor Uncle Finny the most.  So I have decided to take Rose to Ireland sometime in the next year. We’ve always wanted to go, so now we have a good reason to do so. Also, Nate plans on running in the Boston Marathon in 2016. Rose and I are going to go watch him run it.  The money is going to be used for lasting memories, not “things”.  And that is just what Uncle Finny would want.

I can picture Uncle Finny pointing out to his brothers and sisters in heaven how we are having fun with his money. He would get a lot of joy out of that.  And that makes me feel great.