Harvard Professor Henry Louis Gates Jr. is getting a "deeply discounted" two-bedroom apartment in Manhattan from NYU, the New York Post reports:
Gates admitted to the The Post that he has long received his pricey housing perk even though he has never held a job at NYU. Instead, Gates said he has an informal "consultancy" with Sexton that is ungoverned by a written contract.
In addition to advising Sexton's administration on affirmative action and minority faculty hiring, the African-American studies luminary said he has given three or four free talks at NYU over the years.
Gates also suggested that Sexton bestowed the apartment on him as part of an unconventional — and thus far unsuccessful — courting ritual that has dragged on for more than a decade.
"It isn't exactly a secret that President Sexton would very much like to recruit me to the NYU faculty," Gates said.
"Although I do not have an offer from NYU, and while I am very happy at Harvard, were I to move anywhere… no university would beckon to me more strongly than NYU," he added.
Professor Gates is an academic superstar, and I can't fault NYU for wanting to get him involved. What struck me about the deal, though, were the potential tax issues. If NYU just paid Professor Gates $7,000 a month for his lecturing and consulting services — the approximate difference between the rent for a faculty apartment and the free-market rate in an adjacent building, according to the Post article — he'd have to declare it as income and pay income taxes on it. The apartment is a less clear-cut case. Maybe one could make a case that it needs to be declared as barter income by Mr. Gates, and maybe he does make that declaration. But it's a reminder that as marginal tax rates increase, there are all kinds of ways that people will find to pay each other in ways that don't necessarily create easily traceable, IRS-recognizable "income."