Republicans are searching for ways to “pay for” their tax cuts. Democrats want the rich to pay more tax. Here’s a solution that should make everyone happy.
House Ways and Means Committee Chairman Jason Smith is suggesting a tax on the $840 billion college endowments. These endowments will soon eclipse $1 trillion in size — more money than the entire GDP of many countries.
It’s high time that bloated and entitled universities pay their fair share for the government services they use.
Why not? Their professors forever lecture us about tax “fairness,” but the schools where they teach a few hours a week for their munificent salaries are the very embodiment of mostly white “privilege.” They are the richest institutions in the world that go untaxed.
The cost of this leakage to the tax base is going to grow exponentially as this generation of billionaires (Jeff Bezos, Bill Gates, Mark Zuckerberg and others) passes on trillions of dollars; much of it will enter into the vaults of the universities. These are capital gains that have NEVER been taxed — and never will be.
Why is this a problem?
A good and just tax system has a broad base, so everyone pays — but a low rate so the tax system doesn’t discourage work, saving and investment. This means no loopholes and carveouts that allow the rich to keep their fortunes out of reach of the tax man.
What makes the college endowment scam even worse is that the preponderance of the dollars don’t go to small colleges or community colleges but rather to the Harvards, Yales, Stanfords and Princetons, which are already layered with gold and service the elite of society.
It makes no sense that millionaires and billionaires can make seven-, eight- and even nine-figure donations to their alma maters and these funds escape the taxes that all the rest of us pay.
It’s even worse than that. Colleges pay almost no income taxes and generally avoid paying property taxes even though their vast tracts of valuable land are often in or near struggling inner cities.
The universities openly boast to their donor base: Contribute to us and you can avoid paying the estate tax and capital gains tax on your billions. Why aren’t liberals offended by this tax escape hatch?
I have no problem with a deduction for legitimate charities like soup kitchens, homeless shelters and orphanages. But Northwestern and Stanford need tax breaks? Has anyone been to their glitzy campuses?
There are at least a dozen schools bulging with $10 billion endowments, and scores more with more than $1 billion each. We should call these schools Loophole U.
What public purpose is advanced by these storehouses of wealth?
Harvard’s $50 billion-plus endowment is so large that the school could charge free tuition to every student from now until kingdom come — and still not run out of money. Yet Harvard still charges nearly $100,000 a year for tuition and room and board.
But this is the real sin of this unworthy tax loophole. Even with these giant endowments, college tuitions have been rising at two to three times the rate of inflation. The argument that tax-free donations make colleges more affordable has proven to be patently false. The bigger the endowment, the more the schools charge students and their parents — and taxpayers.
Richard Vedder, a widely respected economist at Ohio University, notes that one of the most regressive tax policies is subsidies to billion-dollar universities. It only makes the rich richer.
In a famous scene in the movie “Animal House,” Dean Wormer lectures to one of the students who is facing expulsion: “Fat, drunk and stupid is no way to go through life, son.”
Ironically, that could describe more than 100 overly endowed universities today that are more like investment houses that happen to have classrooms and students roaming around. Colleges need to pay their fair share, and the revenues should be used to help pay for the Trump tax cuts — which benefit everyone. That sounds fair to me.
Stephen Moore is a visiting fellow at the Heritage Foundation. He is also an economic advisor to the Trump campaign. His new book, coauthored with Arthur Laffer, is “The Trump Economic Miracle.”
COPYRIGHT 2025 CREATORS.COM
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
Sometimes Stephen Moore comes off sounding like socialist without ever intending to. At least I hope so. Any time I read an article from a supposedly fiscal conservative, which he is NOT, talking about “fair share” justifications (a decidedly Marxist idea), it just undermines other true fiscally conservative economists.
Yes, university and college endowments should be taxed just like any other investment fund. Which is what these endowments actually are at the end of the day. There is no reason that universities and colleges be allowed to operate what are essentially tax-free hedge funds or capital investment firms outside the existing framework that exists for the entire financial industry.
The reality is our current “progressive” tax code is loaded with all sorts of these absurdities, that all need to be cleaned up or eliminated. I’m not going to get into the flat tax versus fair tax debate, because honestly neither has a chance of being implemented any time soon.
Most of these tax breaks were created with the express intention of members of Congress doing “special favors” (the politicians call them “carve outs”) in exchange for either a fat campaign donation or some special side deal over the years. In any event, most need to be done away with as part of a larger overhaul of the United States tax code. Given there is nothing on the near-term or long-term horizon, in terms of real tax reform being queued up any time soon, this is a nice idea by Jason Smith, but it unfortunately will go nowhere.
Sounds like IT IS TIME FOR EVERY PERSON and INSTITUTION to START THEIR FAIR SHARE OF TAXES! NO MORE FREE RIDES! Go Pres. Trump and company.
Yes to taxing university endowments and also to taxing those multi billion dollar foundations, many of them little more than propaganda outlets.
What, exactly, do the universities do with these endowments? Instead of letting them gather dust, the universities should open them up, access the money and use it so that the universities can lower the cost of tuition for the students instead of transferring the cost of tuition to the already overtaxed taxpayers.
I agree, mostly, but completely reject your use of “White Privilege”. I find that term highly offensive, and don’t accept its use, even tongue in cheek.
Absolutely, the reason is obvious though. This goes way back to the beginning when the schools needed funds and congress helped them out. However they certainly don’t need that protection any more. sen Sanders keeps saying “the billionaires are not paying their fair share, absolutely true, these rich colleges need to be taxed to make the Democrats happy!!!!
One of the issues is the tax dollars that go to these universities from the government are TAXED dollars from the IRS fleecing taxpayers! Why are these colleges and universities receiving ANY money and student loans subsidies from the government at all? All these do is allow tuitions to go up, pay for the indoctrination of our young students and pay professors/administrators FAT salaries to the point that they make more than the POTUS. This is unjust that we allow this to happen!
Stop all taxpayer dollars to these institutions, no more federally backed student loans and make the universities back the student loans to go to their FAT schools. This will create more competition among these elite schools which will drop the cost of college and reduce the bloated pay of professors and administrators, to bring them more in line to the ‘private sector!’
isn’t it ironic that these places teach the young revolutionaries how to wring the necks of those who endow them
Great thinking. I agree, tax the gains made on the endowments. It’s fair to all.
If I were a millionaire or billionaire, I would certainly want to use some of my wealth to support causes that I believe in. But when I look at what universities are producing (godless secular humanists, woke activists, sexually promiscuous amoral beer swilling party goers, people with their heads full of knowledge about transsexualism but devoid of wisdom, and so forth), I would not give one cent to support them! There are plenty of charitable organizations that contribute far more to benefit humankind. But you have to do your research to make sure you pick good ones! There are even colleges like Hillsdale that are worthy of support. But please, please stop sending checks to well endowed woke universities!
May I suggest that all the Ivy schools have no tuition for students till their treasure chest is empty. No foreign students allowed. How much money do these elite schools need? And then they have professors teaching Karl Marx and Mao. Demonstrations are allowed on campus against America by foreign students no less. And the universities don’t do nothing. They are supporting these students by their non action and who suffers? Our American students for they are told to stay home. They call it freedom of speech. No not when they are protesting against America. The Republic is in deep trouble, by all this. The billionaires in the world run everything. Tax them to the max and the universities too boot. Or set a limit on what they can contribute, the rest has to go to state universities and junior colleges and Trade schools. Tax the endowments first.
Either tax them or STOP giving govt. money in the form of grants!
If they don’t tax the endowments then they should get rid of them all together!
You asked a very important question, ‘What public purpose is advanced by these storehouses of wealth?’ The answer is nothing. The universities are doing absolutely nothing with those huge endowment funds to advance education. Plus, as you noticed, they more money, the more they seem to charge for tuition. That is to keep out the so-called riff-raff After all, you can’t have ordinary middle class kids going to school with the upper classes. If congress won’t grow a pair and go after the schools, maybe you should start a grass roots movement to make them pay. And I would suggest about 75% of all the funds not being used for educating the ‘public’.
That is a GREAT IDEA. All ANYONE has to do to find where the most grotesque levels of corruption, obsessions for money, greed, and power (besides Washington DC), are ALL the Ivy League schools, and so many others. They should be highly taxed, which would bring in trillions. And if the parents (mostly Left-wingers, would stop sending their lefty, spoiled kids, then they might lower tuition. NO, they would NEVER DO THAT.
Every slimy rock, crevasse, and $hithole should be overturned to look for all these crooks, scum and maggots, who have been ripping off students and America for DECADES.
A better idea would be to recognize that institutions, like businesses, don’t ever really pay taxes. Only individuals actually pay taxes and any tax on a business or an institution will ultimately be paid by ordinary individuals. These taxes are just passed through to individuals, mostly the middle class. End income taxes, replace them with the Fair Tax, a sales tax on consumption, and make the tax system more fair, efficient and easier with which to comply and enforce. No more time-consuming and difficult tax returns every year. Let everyone determine when and how much he pays in taxes, when he makes purchases. Get your full salary each payday and decide how to spend it. An added bonus is that there would no longer be a need for the Federal government to know your income. Your income should be private information. The size of the IRS and its huge cost would be substantially reduced due to easier enforcement and tax collection efforts of states would no longer be duplicated by the IRS. It’s past time for a more logical and fair Federal tax system, like states already use.
Do this and the next thing we get is taxes on the little schools and the churches. The 501(c)3 exemption exists for a purpose. If you want to even things out, get rid of the income tax and have ONLY tariffs and consumption taxes.
Sounds like a plan to me.
“Want to soak the rich?” What exactly does this mean? It sounds a bit mean-spirited. I don’t expect to see statements like this in an AMAC article.
And watch full-blown Democrat hypocrisy, as they start SCREAMING.
Just make universities co-signers for any student loans.
A friend of mine worked at an Ivy League University. She was finishing up a long day working on an alumni dinner. It was towards the end of the last century over 25 years ago. She stated the University spent $80,000.00 on flowers for the dinner. I asked how could they justify
I agree Tax the rich, greedy universities and pay off the American debt! That will make us a free nation again from the Chinese and the Japanese! Who want to take over our beautiful Country. Just do it! Let them see us enjoy and hear our freedom ring in their ears????! That way communist China can desire to taste freedom in their own land as we have and do; Japan will desire it even more than they’ve already tasted.
It would be a good thing to tax bloated endowments. By that I mean endowments over $500 million. There by protecting small liberal arts colleges and hitting the big moneyed liberal Universities.
& also Tax donations on the college side vs donor side as Income to college
Then see Changes
I don’t want anyones taxes increased. If anyone needs a “fair share” use all the wasted money to pay for something beneficial!
Good idea
I just started 3 weeks ago this web income system that my friend recommended to me and I’ve gotten 2 checks for a total of $9,200… this is the best decision I made in a long time! This extra cash has changed my life in so many ways, thank you!
Here is I started_______ Rebrand.ly/homejobs20
Tax the money donated by the donor AND tax the donations the Universities receive (at the University’s end!!).
This is a democracy. Let’s take a vote!
I am a conservative Republican but this war against education has got to stop. Since when did the GOP become the anti education party?