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Should Baltimore be a “social services” city?

January 25, 2012

Matthew Yglesias, blogger and business and economics correspondent at Slate, has an interesting and polarizing post about charitable giving, religious institutions, and taxes. The crux of Yglesias’s argument is that non-profit institutions should not be exempted from paying property taxes and he really hones in on churches and educational institutions, suggesting that,

It accomplishes nothing whatsoever for the District of Columbia to encourage downtown land to be used as George Washington University buildings rather than offices or apartments.

Some see the piece as an unnecessary attack on religion. The title of the post (“America’s Church Subsidies”) certainly seems a bit inflammatory and there is some language used in the piece that is not particularly sensitive to religious beliefs, but I’m not sure I can say that Yglesias hates religion. Like a lot of political junkies, I follow Yglesias’s work and he’s a wonk and policy theorist, which is to say, in practical terms, that he certainly values property taxes and municipal wealth above religion. So when a pastor correctly points out that imposing a property tax on churches would force thousands to close, I can imagine Yglesias shrugging his shoulders and responding, “Yes, and they will be replaced by tax paying enterprises.”

And that very well might occur in the District of Columbia. Baltimore City, in contrast, would be left with a bunch of unoccupied buildings. As a point of comparison, Baltimore has a downtown office vacancy rate that is more than double that of Washington, D.C. These are two cities with vastly different economies and occupancy demands.  Now, to be fair, I believe Yglesias wrote his piece from the perspective of a D.C. resident, someone observing a growing economy and wanting the city to capitalize on that growth.

Baltimore, unfortunately, isn’t experiencing that sort of economic growth nor residential demand—the city has hemorrhaged residents for decades.  Baltimore is a poor, social services-oriented city (I often joke that there are more Goodwills than Starbucks here), with tax policies that discourage development and residential growth—our property taxes are double that of surrounding jurisdictions.  The point here is that absent the presence of these non-profit institutions, Baltimore would lose out on all of the non-tax benefits these institutions bring and would also be left with increased rates of vacancy.

Now, an argument can be made that Baltimore would be better off having lower vacancy rates coupled with higher tax receipts and increased economic activity. Churches and other non-profit institutions, particularly social service organizations, have significant, though unquantifiable, impact in Baltimore City. The question is, would Baltimore have a reduced need for social services and charity if the city had a vibrant, growing economy (spurred by a more competitive tax policy), with jobs and opportunities for low-income, low-skill residents? On the face of it, it sounds like a very free market, capitalist discussion, but I believe it’s a conversation worth having.

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One Comment
  1. If Baltimore made the switch now, it would not be a good idea. Just as stated above, there is not a high demand for commercial real estate. Businesses are not flocking into the city. If those not-for-profit businesses end up shutting down, the city misses out not just on property tax, but also any payroll taxes, income, taxes etc generated by the fact that those businesses are open.

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