Monday, November 20, 2017

George Will, Protector of the Rich, Now Wants to Protect Massively Wealthy Universities

Opposes Very Modest Tax on Huge Endowments

One of the many financial abuses in American life is the accumulation of huge endowments by very wealthy colleges and universities who then just accumulate more money. Harvard is the biggest offender here, they charge a large tuition while at the same time building and building their endowment.

In the Republican tax bill there is provision to put a very small tax on these endowments. George Will is horrified!

Most university endowments are compounds of thousands of individual funds that often are restricted to particular uses, all of which further the institutions’ educational purposes. Hence these endowments are akin to the untaxed “operating foundations.” Yet the Republicans, without public deliberations, and without offering reasons, would arbitrarily make university endowments uniquely subject to a tax not applied to similar entities.

What is Will logic? Well this.

Are Republicans aware, for example, that Princeton University’s endowment earnings fund more than half its annual budget and will support expansion of the student body? 

Notice that what is being said is that not only is none of the principal of the endowment being used to support operations, only half of the earnings are plowed back into benefits. Good grief. So if a person gives Princeton, which is one of the better places to give, $1 million, then not only does none of the $1 million go to student aid or reduced tuition, only half of the income from investing the $1 million goes to student help. If the $1 million earns 6%, then only $30,000 a year is used for benefits. These places deserve a higher tax, not a lower one.

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