Those on the political left generally support taxes, but a recent article from the Association of Mature American Citizens (AMAC), often viewed as a conservative alternative to AARP, has proposed a tax that is likely to cause controversy, especially among academics.
That tax? A tax on university endowments. The plan has some things going for it, but it may not be that easy to see it done:
Jason Smith, the House Ways and Means Committee Chairman, has recommended imposing a tax on the $840 billion held by college endowments. These endowments are on track to exceed $1 trillion, surpassing the GDP of many countries.
It’s high time that bloated and entitled universities pay their fair share for the government services they use.
This proposal questions the fairness of tax policies advocated by professors in universities. The institutions they work for, where they spend only a few hours teaching and receive significant salaries, represent significant wealth and privilege, remaining untaxed despite being among the wealthiest globally.
Untaxed? Yes, untaxed. Their professors, along with the staff and other faculty, pay personal taxes, sure. But the universities’ massive endowments are not taxed, even though they do realize capital gains. Were these private companies, the left would be champing at the bit to tax those gains, but since it’s academia – crickets:
There are at least a dozen schools bulging with $10 billion endowments, and scores more with more than $1 billion each. We should call these schools Loophole U.
What public purpose is advanced by these storehouses of wealth?
What purpose, indeed? The students of these schools pay some pretty impressive tuition bills, and many students are subsidized by our tax dollars, if not directly, then through the guise of grants and government-subsidized student loans provided to the young skulls full of mush attending these elite academies. And yet, they have these huge piles of money available and seem to do little with them.
And some of these endowments, yes, are astronomical:
Harvard’s $50 billion-plus endowment is so large that the school could charge free tuition to every student from now until kingdom come — and still not run out of money. Yet Harvard still charges nearly $100,000 a year for tuition and room and board.
But this is the real sin of this unworthy tax loophole. Even with these giant endowments, college tuitions have been rising at two to three times the rate of inflation. The argument that tax-free donations make colleges more affordable has proven to be patently false. The bigger the endowment, the more the schools charge students and their parents — and taxpayers.
The rise of college tuition, of course, is a separate issue, and it’s not primarily due to the endowments; it’s due to the government guaranteeing student loans and pouring bushels of grant money into the universities that causes this inflation. And yet, the left persists in dealing with this as they deal with every problem–by attempting to drown it in taxpayers’ money.
So, what form would a tax like this take?
