My next update has to do with private hospitals and private universities in this
country. They are very often examples of again financial misdeeds disguised as lofty pursuits.
Let me begin with the hospitals. They were getting- the people who run them,
the CEO's of hospitals- many millions of dollars throughout the pandemic. Yeah we heard a lot about
'we're all in it together,' but it turns out we weren't. The CEO's of the big hospitals were
getting huge amounts of money while the people on the front lines (the nurses, the doctors,
all the personnel scurrying around a typical hospital during a pandemic) didn't get much of
an extra help, didn't get millions of dollars and many of them got COVID with all that that implies.
People thinking about these institutions should also be aware of what it means when
they are labeled "non-profit," "non-profit hospitals," "non-profit universities."
So, I want to tell you what that means. And my example, since I've mentioned hospitals,
will be now a university and in particular Yale University which I have studied over the years,
because I have my doctorate in economics from Yale University. Yale is a non-profit, so-called,
institution. Does that mean that it doesn't earn a profit? Let me be very clear with you.
No it doesn't mean that at all, and it never did. Where does the phrase non-profit come from? Well,
it has an origin. And the origin is in another phrase which is much more accurate,
which is why they dropped it. What it means is it's not taxed under the law.
A hospital and a university are not taxed. They are considered socially desirable institutions
and to make sure we have them, so the argument goes, we don't tax them. So, Yale University is
a non-taxed institution. It earns an enormous amount of money. It has assets in the billions,
and its annual budget is in excess of a billion dollars. Does it take in more money than it pays
out in expenses? Absolutely. Would you call that difference of profit? Absolutely. That's what the
word means, but then they, do something which is legal under the law we have in this country. They
take the difference between the income they get and the expenses they have (all the electricity
in the classroom, the professor's salary and all the rest of it). They take the profit,
and they add it to their endowment. You know what that means? It's like you have a profit,
and you add it to your savings account. But in your case, that's the end of the story.
Not for the hospitals and universities. Under the accounting rules in the United States,
when Yale takes its profit and adds it to its storehouse of value (its endowment funds in
banks and so on) that is considered 'providing for its future' and is therefore a cost also.
Then, that profit disappears, and they have no tax because
their profit has been handled in that way. But make no mistake. The hospital, the university
that calls itself non-profit discovered that that sounds and looks a lot better
than what they've got going, which is tax holiday forever. Universities use their- used to be total
relief of taxes. Now, recently they have a very, very tiny amount to pay. Much, much,
much smaller percentage than you and I pay on our income. And if we take some of our net income and
added to our savings account, we can't count that a cost the way the universities can.
It's just a sign again that- as more and more politicians are recognizing- the system is rigged.