Ivy League endowments are so tempting for money-hungry liberals who want to increase government debt leverage.
The headline at Slate is quite clear: “Is It Time to Tax Harvard’s Endowment?”
Of course, Jordan Weissmann’s editorial is not just aimed at Harvard. It is aimed at all Ivy League endowments.
I pretty much hate schools like Harvard and Yale. They rule us and control institutions like the Supreme Court. But I still hate Weissmann’s proposal.
In 2014, the university’s legendary endowment, overseen by a team of in-house experts and spread across a mind-bending array of investments that range from stocks and bonds to California wine vineyards, hit $36.4 billion. “They’re just collecting tons, and tons, and tons of money,” says Schneider, a former Department of Education official who is currently a fellow at the American Institutes for Research.
Of course, normal hedge funds have to pay taxes on their earnings. Because it’s a nonprofit, Harvard doesn’t. And since bestowing tax exemptions is the same as spending cash from the government’s perspective (budgeteers call them “tax expenditures” for a reason), that means the American public effectively subsidizes Harvard’s moneymaking engine. The same goes for Stanford (endowment: $21.4 billion), Princeton (endowment: $21 billion), Yale (endowment $23.9 billion), and the country’s other elite institutions of higher education.
Aiding wealthy research universities that cater to largely affluent undergraduates might have been acceptable in a more flush era. But at a time when state colleges are still suffering from deep budget cuts that have driven up tuition and politicians are stretching for ways to make school more affordable for middle-class students, clawing back some of that cash to spend on needier schools is starting to sound awfully appealing. Which is why it might just be time to start taxing Harvard and its cohort.
So “bestowing tax expenditures” is the same as subsidizing. Once that moral equivalence is asserted, then raiding money that other people make can be portrayed as ending “aid” to the wealthy.
First of all, the money that could be gained by taxing these schools simply isn’t going to be enough to substantially help anyone. So the idea that this is going to make school more affordable for anyone else is an illusion. The only thing this brings is the satisfaction of hurting people who appear better off for the sake of hurting them. This is one of those times when “spreading the wealth” is really about “making sure everyone else is as miserable as the rest of us.”
Secondly, what if someone wants to start a new private school? Do we want to make that more difficult? Right now, I would think that Asian-Americans would be giving serious thought to forming their own Ivy League schools, given how much they are mistreated in order to give Whites and other races “affirmative action.” Taxing such non-profits would put them at a competitive disadvantage. It would leave the present Ivy League schools, with their huge endowments, with even more of an advantage.
Freedom is a gift that everyone can have. We should all be free to keep our money rather than having to pay the Feds to not put us in jail.