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.
Yes to taxing university endowments and also to taxing those multi billion dollar foundations, many of them little more than propaganda outlets.
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!’
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.
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.
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!!!!
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.
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!
isn’t it ironic that these places teach the young revolutionaries how to wring the necks of those who endow them
Either tax them or STOP giving govt. money in the form of grants!
Great thinking. I agree, tax the gains made on the endowments. It’s fair to all.
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.
If they don’t tax the endowments then they should get rid of them all together!
Just make universities co-signers for any student loans.
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.
And watch full-blown Democrat hypocrisy, as they start SCREAMING.
It would be nice if the colleges would teach instead of indoctrinate…I hate to see my tax dollars used that way.
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’.
Look at state employee salaries and you will find that state university employees, especially presidents and top administrators are many, if not all, of the highest paid employees in the state. That is if you don’t include head football coaches. I live in a university town and the university president at this G5 school makes 500k a year. He’s just a figurehead surrounded by a nearly equally high paid group of VP’s, deputy VP’s, Associate Deputy VP’s, and on and on. The level of Bureaucracy in major universities is mind-boggling, and they make incredible salaries, well above the private sector. The Dems will fight taxing these huge endowments because it serves their purpose of training their next generation of rich liberals. They only want to tax the rich who don’t believe what they believe. I’m a Christian but religious institutions need to be looked at too. Not small churches, synagogues or mosques, but huge religious institutions that are more about politics and other agendas than spiritual things. Many are a scam.
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
Good idea
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.
Sounds like a plan to me.
Why do these colleges need to be subsidized anyway? They charge an arm and a leg and waste 2/3 of it (professors who work one hour a day and whine because they are underpaid or have to work too much and way too many administrators).
Why should the taxpayers support these Universities anyway? It is ridiculous. Don’t know why it was ever started in the first place. And charging that much money to go there is a crime. Shame on them for milking not only the government but the students/parents who go there. Yes they should have to pay property taxes and income taxes on those endowments. Just another scheme for the rich to get richer, or loopholes for the filthy rich not to pay taxes.
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.
& 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!
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.
Tax the money donated by the donor AND tax the donations the Universities receive (at the University’s end!!).
“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.
I could not agree more. Time is up to pay up!
Why are students having to get loans from the Government or private institutions when the colleges “Endowment” could easily lower the cost of loans for students by loaning the money themselves or at least lowering the cost of education so the student could work, go to school, and still pay for it. Maybe, even teach courses that a person could use to get a good paying job. Isn’t it sad when a plummer, carpenter can make almost as much and in some cases more than a doctor. Yes, TAX the ENDOWMENTS!!!!
With endowments in the trillions of dollars of value mentioned above, they can subsidize their own students and everything else. There is NO NEED for them to be taking our Federal and State tax money! And the value of these endowment funds skyrocketed in value since the take over by the progressive liberal left wing.
Well written article. Tax away and stop tax dollar funding the elite universities .
No one can explain to me why the university endowments are not taxed. Hmm, makes me wonder that something shady is going on,,,
It never seems to occur to the noisy politicians that THEY PASS THE TAX LAWS. If someone is not paying their fair share, then, who is to blame? Everyone, and I mean absolutely everyone, should have to pay something. You get welfare? Better save a couple of dollars because you have to pay, too. Endowments to universities? Get out your checkbook, no more free ride. Whenever politicians say tax the rich, run for the hills, Middleclass, they’re coming for you.
Having lived and worked in Evanston Illinois, I know that Northwestern University pays nothing to the city for all the services they receive. When people start to complain they will give a million or two to the city to quiet the citizens. The last I heard, they were trying to get their endowment to a billion dollars. Pretty good for a “non profit” organization. It is high time they started paying their fair share. They own so much property there and don’t pay real estate taxes. It is high time this situation was remedied!
THAT would be a great BEGINNING to reigning in overtly liberal beyond imagination universities & colleges
ALL federal funding for colleges and universities should be stopped and refunds collected. Funding these major Institutes of INDOCTRINATION has been the biggest Ponzi scheme in America’s history. These greedy, arrogant Fat Cats leading these colleges and universities, have been RAKING IN THE TENS OF BILLIONS, paying their Left-wing progressive, socialist Commie professors 6-digit salaries, while screwing the students with TOTALLY UNJUSTIFIED AND ASTRONOMICAL TUITION. Further, NEVER has a college or university been held accountable for their ‘end products’ (graduating students), with documented 1-5-10-year follow-ups, to see and verify as to whether they have become employed in their chosen fields, IF they’re actually making a positive contribution to society, have gone on to see success, etc.
So many colleges and universities simply don’t give a damn whether their students become successful. They just continue their Left-wing progressive INDOCTRINATION of their students (that the public schools started in grades K-12). Only they have added courses, just to name a few like: – America, The Land of Hate, Slavery, Theft, and Racism – Then there’s the required 6-quarter series Professional Protesting 100-105 – US Flag Burning, Rioting, and Arson – Tried and True Ways to Start and Spread Chaos, Lies, and Hatred for Society – How to Start Legislation to Defund Law Enforcement – One Hundred Successful Ways to Vandalize and Spread Terror – Showing Brotherly Love for Illegals and other Terrorist Organizations
The biggest tax loophole is the tax exempt houses of worship … not universities. Yes to taxing churches and other houses of worship!
I say go for taxing those endowments. Ridiculous how much they charge for a political activist education and atheist/communist indoctrination. Their philosophy and psychiatry departments need a complete overhaul with the European Marxist (communist)/atheist instructors thrown out of their jobs.
Should Tax all Colleges and Universities as a corporation. None of these schools are a 501C tax exempt charity. Hit these schools with a 20% or so income tax on all donations, and pay property taxes to the cities. Maybe is a State College or University, no property tax.
Perfect!
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?