I have very mixed feelings on this. The existence of a pile of money somewhere doesn’t alone justify taxing it.
In the case of endowment funds for chairs, the payout to the professor is taxed as income to the professor.
But the uber wealthy universities do at times seem to be building wealth for its own sake rather than for an educational purpose.
John: I don’t share the ambivalence. We’re not talking about a pile of money; we’re talking about Kangchenjunga. Whether it’s one individual person hoarding ten billion dollars, or one university hoarding 37 billion, the greed is unconscionable. In a world of obscene inequalities, acquisitiveness this depraved has to be intervened in by decent people/societies, and the only way to truly intervene is through taxation.
John: No – in the specific case of an endowment directed toward a name chair, for instance, I agree with you.
But then again – ultrarich universities routinely insist that huge gobs of endowment money are directed by donors to specific purposes, so their hands are tied, blah blah. In many cases this is a bogus argument – universities are perfectly able to discuss with donors where they think money might most intelligently be directed, and I’m sure many donors would be happy to be flexible on the matter. And of course even huger gobs of university money are undirected – they’re just plain old unencumbered wealth of which the ultrarich should … unencumber themselves.
If Harvard, Yale, etc truly believe that they offer superior education…wouldn’t it be their responsibility to use their endowment income to create additional campuses, working on the same principles and with similar faculty, so as to bring the benefits of this superior education to more people?
OTOH, if their objective is to increase the value of their degrees by limiting the supply..like destroying the plates after producing a certain number of prints…they would not want to do any such thing.
No. The tax code doesn’t know from admirable. It just extracts money for the good of the commonwealth. It doesn’t get angry about things like Harvard’s endowment and the Paradise Papers/Panama Papers. It just tries to get a handle on them.