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The Really Rich Schools Complain

The leaders of America’s 49 wealthiest institutions of higher learning have written to Congressional leaders to protest the Trump administration’s so-called endowment tax:

… the law in question places a 1.4 percent excise tax on net investment income at colleges and universities with at least 500 students and more than $500,000 in net assets per student.

Endowment Tax Letter1a.jpg

Endowment Tax Letter2.jpg

Endowment Tax Letter3.jpg

The special pleading in this letter recalls the Washington Monument Syndrome, wherein the Department of the Interior is asked to pare its budget. The Secretary tells the President that he would be happy to make cuts, but he must inform the President that the Washington Monument will be closed to visitors in order to meet his cost reduction targets.

And so it goes with these wealthy colleges and universities, all of which, like Dartmouth, pay fat salaries and lush benefits to their bloated staffs. In the hands of competent leaders, these schools could pay the requested tax, increase financial aid, and cut tuition — but only if they would forthrightly trim the fat from their enormous budgets.

To assert that the tax should be repealed because it will impact financial aid to students is at best disingenuous.

Addendum: Curiously, Cornell, Brown and Penn have signed the letter, but Columbia has not. The three former schools and Columbia, too, don’t appear to be subject to the tax because their endowments are not large enough to reach the threshold of $500,000/student, unlike the richest Ivy schools: HYP and guess who?

NYT Endowment Per Student1a.jpg

The College is immensely richer on a per student basis than Cornell, Brown, Penn and Columbia (click on the table to expand it). The fact that our faculty is underpaid and so much of our infrastructure in decaying or substandard illustrates the degree of wasteful spending on the staff.

Addendum: An effort is now being made to repeal the endowment tax. The Chronicle of Higher Education reports:

Less than three months after an overhaul of the nation’s tax code was signed into law, a pair of federal lawmakers has introduced bipartisan legislation to repeal a provision that was roundly opposed by higher education.

The Don’t Tax Higher Education Act, introduced on Thursday, is sponsored by Rep. John Delaney, Democrat of Maryland, and Rep. Bradley Byrne, Republican of Alabama, and would repeal the levy on university endowments in the new tax law…

Addendum: An alumnus writes in:

All we need to do is double the number of students, and endowment income per student will be halved, maybe below the threshold… problem solved.


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