Should college/university endowments be taxed?(please read before voting)

jamesrage · 05-11-08, 08:57 AM

Should college/university endowments be taxed?I say yes,they tax other businesses so why not colleges/university endowments.

Glenn Beck - Current Events & Politics - Glenn Beck: Taxing Success

Quote:

Well, now in Massachusetts they are looking to tax college endowments, university endowments that have more than a billion dollars in it. They say that by doing this, they can put more than a billion dollars a year into the state revenue. Legislators have asked state finance officials to study a plan that would impose a 2.5% annual assessment on colleges with endowments over a billion dollars. Now, the universities are very upset and here's quite possibly -- I want to frame this. I want to frame this. I want this on my wall of my office. When a nonprofit, when a nonprofit is making money, it's mind-boggling. Why tax them?

Now, one guy who is head of the ways and means committee in Massachusetts says it's mind-boggling that an entity wouldn't be paying taxes that has $34 billion. How can you justify that when people can't afford to live, how could you justify not taxing them? Ready? Here it is. This is what I want framed. Kevin Casey, Harvard's associate vice president for government, community and public affairs said, "You can't do that. You'd be taxing success." No, it gets better. "And over time this would put us at a competitive disadvantage. It would hurt the state." No, you're kidding me. It's like you're taxing success by taxing people who are making money and who happen to be richer than others? You're taxing success? Boy, Kevin, I never looked at it that way.

List of U.S. colleges and universities by endowment - Wikipedia, the free encyclopedia

Quote:

Institution ↓ Endowment (2005)Endowment (2006)Endowment (2007)
Amherst College $ 1.155 $ 1.337[2] $ 1.700
Baylor College of Medicine $ 1.008 $ 1.059[1] $ 1.080
Baylor University $ 0.756 $ 0.870 $ 1.000[3]
Boston College $ 1.270 $ 1.400[4] $ 1.750
Brown University $ 1.843 $ 2.166[5] $ 2.800
Boston University $ 0.776 $ 0.916[1] $ 1.220
California Institute of Technology $ 1.781 $ 1.972[6] $ 2.328[7]
Carnegie Mellon University $ 0.837 $ 0.939[1] $ 1.056
Case Western Reserve University $ 1.516 $ 1.598[1] $ 1.864[8]
Columbia University $ 5.191 $ 5.937[9] $ 7.150[10]
Cornell University $ 3.777 $ 4.321[11] $ 5.400[12]
Dartmouth College $ 2.714 $ 3.092[13] $ 3.760[14]
Duke University $ 3.826 $ 5.363[15] $ 5.900
Emory University $ 4.376 $ 4.870[1] $ 5.600
Georgetown University $ 0.741 $ 0.853[16] $ 1.052[16]
The George Washington University $ 0.823 $ 0.963[1] $ 1.019
Georgia Institute of Technology $ 0.937 $ 1.047[1] $ 1.324
Grinnell College $ 1.674[17] $ 1.471[1] $ 1.670
Johns Hopkins University $ 2.177 $ 2.350[1] $ 2.800
Harvard University $ 25.5 $ 28.915[18] $ 34.900
Indiana University (system-wide)[19] $ 1.107 $ 1.276[1] $ 1.883
Massachusetts Institute of Technology $ 6.712 $ 8.368[20] $ 9.980
Michigan State University $ 1.325 $ 1.483[21][22] $ 1.631 [23]
New York University $ 1.548 $ 1.774[1] $ 2.500[24]
Northwestern University $ 4.215 $ 5.330[25][26] $ 7.00
The Ohio State University $ 1.726 $ 1.996[27] $ 2.020
Penn State University $ 1.155 $ 1.326[1] $ 1.400
Pomona College $ 1.298 $ 1.459[28] $ 1.763[29]
Princeton University $ 11.207 $ 13.044[30] $ 15.800
Purdue University $ 1.341 $ 1.493[1] $ 1.787[31]
Rice University $ 3.611 $ 3.986[1] $ 4.665
Rockefeller University $ 1.557 $ 1.771[1] $
Smith College $ 1.036 $ 1.156[1] $ 1.125
Southern Methodist University(SMU) $ 1.014 [32] $ 1.121 [33] $ 1.328 [34]
Stanford University $ 12.2 $ 14.084[35] $ 17.200
Swarthmore College $ 1.164 $ 1.245[1] $ 1.400
Texas A&M University System (system-wide)[19] $ 4.964 $ 5.642[1] $ 6.590
Texas Christian University $ 0.941 $ 1.016[1] $ 1.430
Tufts University $ 1.153 $ 1.215[1] $ 1.6
Tulane University $ 0.747[36] $ 0.890[37] $ 1.000[38]
University of California (system-wide)[19] $ 5.221 $ 5.733[1] $ 6.700[39]
University of Chicago $ 4.137 $ 4.867[40] $ 6.091[41]
University of Cincinnati $ 1.032 $ 1.101[1] $ 1.185
University of Delaware $ 1.077 $ 1.223[1] $
University of Florida $ 0.835[3] $ 0.996[4] $ 1.219[5]
University of Illinois (system-wide)[19] $ 1.148 $ 1.252[1] $ 2.197
University of Kansas $ 0.955 $ 1.049[1] $ 1.240
University of Michigan $ 4.931 $ 5.652[42] $ 7.090[43]
University of Minnesota $ 1.969 $ 2.224[1] $ 2.800[44]
University of Nebraska (system-wide)[19] $ 1.042 $ 1.153[1] $
University of North Carolina at Chapel Hill $ 0.973 $ 1.149[1] $ 2.2[45]
University of Notre Dame $ 3.650 $ 4.436[46] $ 6.500[47]
University of Oklahoma $ $ $ 1.108[48]
University of Pennsylvania $ 4.370 $ 5.313[1] $ 6.630[49]
University of Pittsburgh $ 1.530 $ 1.802[50] $ 2.254 [51]
University of Richmond $ 1.208 $ 1.388[1] $ 1.650
University of Rochester $ 1.370 $ 1.491[1] $ 1.770[52]
University of Southern California $ 2.746 $ 3.065[1] $ 3.7[53]
The University of Texas (system-wide)[19] $ 11.610 $ 13.234[54] $ 15.600
University of Virginia $ 3.219 $ 3.618[55] $ 5.061[56]
University of Washington $ 1.489 $ 1.794[1] $ 2.500
University of Wisconsin (system-wide)[19] $ 1.125 (only UW Foundation)[57] $ 1.426[1] $
Vanderbilt University $ 2.628 $ 2.946[1] $ 3.400
Wake Forest University $ 0.907 $ 1.042[1] $ 1.15
Washington University in St. Louis $ 4.268 $ 4.684[1] $ 5.658[58]
Wellesley College $ 1.276 $ 1.412[1] $ 1.670
Williams College $ 1.514 $ 1.56[59] $ 1.9[60]
Yale University $ 15.2 $ 18.030[61] $ 22.500
Yeshiva University $ 1.149 $ 1.273[1] $

aegyptos · 05-11-08, 11:55 AM

Sure, why not? They're in it for the money just like any other business.

Kandahar · 05-11-08, 12:41 PM

Quote:

Originally Posted by aegyptos

Sure, why not? They're in it for the money just like any other business.

Umm...not exactly. At least not at most colleges.

At most colleges, they reinvest all of their money back into the college itself. You can't buy some shares in a college and expect to profit from it, like you can for a business. There are a few exceptions, but most colleges more closely resemble non-profit charities than businesses.

My answer to the poll question is "maybe." If we're talking about a for-profit school like ITT or DeVry or various online-only schools, then yes they should be taxed. If we're talking about a regular university like Harvard or MIT, then no.

Dezaad · 05-11-08, 12:44 PM

I need more information.

The reason non-profits have endowments is supposedly due to the fact that they perform a public service that otherwise would have to be provided by the government if it were to meaningfully exist at all. I believe this is what the official at Harvard was referring to: Harvard is successful at supplying this public service, thus the large endowment, thus you'd be taxing success. If this is so, he may have a point. I am sure he would argue that you shouldn't tax success when the success is in providing a public service, but its ok (possibly even desirable) to tax success when the beneficiaries of that success are primarily wealthy owners. In the case of Harvard, the primary beneficiaries are presumably their students.

There seems to be a sentiment that these institutions are businesses operating for profit. If this is so, can someone point me to where there are individual people who are the owners who, in turn, are collecting profit? Is their stock traded on a stock exchange, or are they privately held entities?

On the other hand, I do remember being made aware that the Getty Foundation had become too wealthy and was about to lose its non-profit status as a result. It was for this reason that the Getty created the new Getty Museum, and remodelled the old Villa. Given this, there seems to be some criteria for judging when an entity without any owners has nevertheless become a "for profit" institution.

Be that as it may, it seems to me that profit is a thing that must have an owner in order to exist.

obvious Child · 05-11-08, 05:06 PM

A non-profit that is funding education is suppose to make money off its investments. If it was constantly reducing its principle without other inflows on cash, it would eventually go bankrupt and thus be unable to provide education. The argument for taxing it because it makes money ignores this fact. Therefore, non-profits dedicated towards providing education shouldn't be taxed on education related monies.

aegyptos, there are very few for profit colleges and universities that are run on the business principle of profit making. You can't apply a belief on a few to that of the many.