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.
If the wealth is “hoarded” for no good purpose, I can see it,
In my example, if the income from an endowment is fully paid out to faculty as compensation, what’s the argument for taxing it… that professors are overpaid? I don’t see it.
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.
having worked on campaigns, i’ve always been surprised at how unwilling schools are to suggest to donors that they fund the school’s priorities rather than the donors’.
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.
November 4th, 2017 at 3:29PM
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.
November 4th, 2017 at 4:18PM
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.
November 4th, 2017 at 4:42PM
If the wealth is “hoarded” for no good purpose, I can see it,
In my example, if the income from an endowment is fully paid out to faculty as compensation, what’s the argument for taxing it… that professors are overpaid? I don’t see it.
November 4th, 2017 at 5:02PM
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.
November 4th, 2017 at 6:41PM
having worked on campaigns, i’ve always been surprised at how unwilling schools are to suggest to donors that they fund the school’s priorities rather than the donors’.
November 5th, 2017 at 12:09PM
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.
November 5th, 2017 at 12:30PM
David: It’s like the evolution of the art market – the most brilliant and valuable canvases and sculptures tend to be locked away in vaults.
November 6th, 2017 at 8:29AM
it would be admirable, for sure. is coercing admirable behavior the job of the tax code?
November 6th, 2017 at 8:44AM
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.
November 8th, 2017 at 9:13PM
https://www.nytimes.com/2017/11/08/world/universities-offshore-investments.html