The Birth and Death of a Quirky Tax Exemption
By: Michael Satlow
Tags: Higher Education, Brown University, Taxes

July 15 is Tax Day, the day that most income tax returns are due. The nationwide extension from the normal date of April 15 is, from what I can tell, unprecedented. A state or region celebrating a holiday or hit by disaster occasionally get an extension, but nothing like this has ever happened. Tax Day can mean many things to different people, although the bottom line is most often anxiety. This is my attempt, if not quite to lessen the anxiety, at least to give you a good reason to procrastinate by reading about taxes instead of actually working on your own.

Several years ago, when I was promoted to full professor at Brown University, along with my official written notification I received a photocopied letter made from an original that had seen better days. In old typewriter typeface, it notified me that my promotion was conditional on my renouncing my right to receive a tax exemption under Rhode Island law. There followed a short and cryptic bit of legalese, with the statute numbers. I thought that this was a bit odd, but signed the paper and filed it away as something to look into at a future date. I finally had some time (well, really, took time away from more pressing things) to track down the story behind that letter.

In 1764, on the last Monday in February to be exact, the General Assembly and Governor of “the English Colony of Rhode Island and Providence Plantations,” enacted the charter that founded Brown University, which at the time of the charter was still unnamed. The charter (a printed and annotated edition from 1945 can be found here and it is also incorporated into the Records of the Colony of Rhode Island, Volume 6 — page numbers below refer to the former) contains the following paragraph:

And furthermore, for the greater encouragement of this seminary of learning, and that the same may be amply endowed and enfranchised with the same privileges, dignities, and immunities enjoyed by the American colleges and European universities, we do grant, enact, ordain, and declare, and it is hereby granted, enacted, ordained, and declared, that the College estate, the estates, persons, and families of the President and Professors, for the time being, lying and being within the Colony, with the persons of the Tutors and students, during their residence at the College, shall be freed and exempted from all taxes, serving on juries, and menial services; and that the persons aforesaid shall be exempted from bearing arms, impresses, and military services, except in case of an invasion. (pp. 16–17)

There is some precedent for the rewarding of exemptions to college personnel in the Colonies. According to the Harvard Charter of 1650:

And further be it ordered by this Court and the authority thereof that all the lands tenements or hereditaments houses or revenues within this jurisdiction to the aforesaid President or College appertaining not exceeding the value of five hundred pounds per annum shall from henceforth be freed from all civil impositions taxes and rates all goods to the said corporation or to any scholars thereof appertaining shall be exempted from all manner of toll customs and excise whatsoever. And that the said President Fellows and scholars together with the servants and other necessary officers to the said President or College appertaining not exceeding ten, viz. three to the President and seven to the College belonging shall be exempted from all personal civil offices military exercises or services watchings and wardings and such of their estates not exceeding one hundred pounds a man shall be free from all country taxes or rates whatsoever and none others.

Yale’s charter (p. 11) has an exemption similar to Harvard’s, which appear to be not as generous as Brown’s — which is uncapped. I assume that the granting of such exemptions draw on a European, or at least English, practice. (In antiquity, incidentally, scholars and clergy were often granted highly sought-after tax exemptions.)

At Brown, the exemption survived without any raising any public concerns for almost a century (I did not examine how it fared in other states). During the Civil War, though, it began to rankle the citizens of Rhode Island. A resolution out of the Newport City Council led to a committee report from the State Senate. On August 28, 1862, the Providence Daily Journal reported:

The act repealing that portion of the charter of Brown University which exempts its professors from taxation, which had been made the order to the day, was taken up [by the State Senate]. Mr. POTTER of South Kingstown, chairman of the Committee on the Judiciary, mad an extended report, accompanying this bill. The report, after reciting the facts in the case, examined the question of whether the repeal of this exemption would be in conflict with the constitution of the United States [presumably because Brown was still a religious institution], and comes to the conclusion that it would not be. It reviews the cases decided in the courts, and gives copious extracts from the opinions of the Judges, and concludes with stating that from the well known patriotism of the officers of the college, they will no doubt be willing to cheerfully pay their proper portions of taxes necessary to preserve the Union and constitution in this great crisis.

The act, which repeals the exemption entirely, passed the committee unanimously. When the General Assembly, took it up, though, it was significantly tempered. The GA was hesitant to act without the consent of Brown and they reached an agreement to limit the exemption to $10,000 of the assessed value (Public Laws 1863, chapter 451; see also Providence Daily Journal, February 10, 1863, p. 2). At a special session the next day Brown’s Corporation ratified the new figure as an amendment to its Charter (pp. 21–22), justifying it in part by writing:

AND WHEREAS those influences can and will be most happily diffused and continued by a cordial good will and a harmonious cooperation between the General Assembly and citizens of this State and the University…

In the midst of the Civil War, the Brown corporation clearly felt it would be churlish, if not downright stupid, to oppose the will of the State.

Still, the exemption seems pretty sweet. According to one online calculator, $10,000 in 1863 is worth around $203,000 in our time., although this seems questionable. While I could not find real estate sales records for 1863 in Providence, one chart — for the sake of comparison — suggests that monthly rent for a house in RI hovered at around $10/month. This suggests that the real estate prices -and taxes — were low enough that many college employees could still enjoy a full exemption.

For almost 90 years subsequently, the issue seems to have died down. In 1951, though, it resurfaced in a different way. An assistant professor at Brown University named Karl Weimer sued a RI tax assessor for not allowing him to take the tax exemption. The Court, in 78 RI 221, 80 A.2d 887 was not sympathetic. Since Weimer (who went on to have a distinguished career at Brown, even after losing the case) was not a full professor (professorial ranks did not exist in 1863) he was, the Court ruled, not entitled to this exemption.

But the exemption lived on. According to RI General Laws 159 44–3–3 (which I think was released in 1956):

(9) Estates, persons, and families of the president and professors for the time being of Brown University for not more than ten thousand dollars ($10,000) for each officer, the officer’s estate, person, and family included.

(Lest anyone think, as I originally did, that this was a strangely specific exemption, a quick reading of the entire chapter — which is full, to this day, of strangely specific exemptions — will disabuse one of that notion.)

America was changing, though, and the exemption was making Brown increasingly uncomfortable. In 1965, the Brown Corporation directed legal counsel to draft the letter of renunciation that I ultimately received and approved the policy making promotion to full professor — in response to the Weimer case — contingent on signing it. To the University’s embarrassment, however, Rhode Island tax assessors continued to include being a professor at Brown on the list of possible exemptions that they sent out to citizens. In 1995, the University formally asked assessors to strike this clause from their letters.

The State was not fully satisfied. In July 1, 1997, the State finally killed the exemption, albeit with a grandfather clause:

(9) The estates, persons, and families of the president and professors for the time being of Brown University for not more than ten thousand dollars ($10,000) for each officer, his estate, person, and family included{ADD , but only to the extent that any person had claimed and utilized the exemption prior to, and for a period ending either on or after December 31, 1996 ADD} ;

I was recently told anecdotally that a single Brown professor, who was a full professor prior to 1966 and who is still active on the faculty, still enjoys this exemption.

Now, back to taxes.

See also William W. Brickman, “Tax Exemption Privileges for Professors of Brown University,” History of Education Quarterly (1966): 65–78 (DOI: 10.2307/367216).