Yes
Is It Time to Tax Harvard’s Endowment?
41–50 of 96 posts
Re: Is It Time to Tax Harvard’s Endowment?
#42Earlier quoted context omitted.
Harvard waives fees altogether for families making less than $65,000. More than 60% of US households have income less than that+, yet only 20% of Harvard's undergraduate class pays no fees. From this we reasonably say that Harvard is mostly a school for rich kids, despite its generosity to those non-rich kids it lets in. In this way it is similar to elite private high schools in NYC or boarding schools in New England…
> Harvard waives fees altogether for families making less than $65,000. More than 60% of US households have income less than that+, yet only 20% of Harvard's undergraduate class pays no fees. From this we reasonably say that Harvard is mostly a school for rich kids, despite its generosity to those non-rich kids it lets in. This argument is backwards. Harvard has a need-blind admission policy, which means that admissi…
Having a need blind admission policy doesn't mean that admission decisions are judged solely on the merits. For example, what is meritorious about having a parent that went to Harvard?
Re: Is It Time to Tax Harvard’s Endowment?
#43When public education needs more money, taxing private education to support them doesn't help education in the society as a whole. High education should not be taxed, period. It's investment towards more tax income in 3-4 years. If you need to tax something to support some providers of education, it's not other providers of eduction.
One issue here is using tax policy to incentivize investment in higher education by penalizing institutions for NOT spending huge endowment windfalls on higher ed. You don’t tax Harvard the school like you tax a corporation. You tax Harvard the fund, if and only if it’s not existing primarily to support Harvard the school. Sitting on money doesn’t help the economy much.
> Sitting on money
Except the Harvard endowment isn't "sitting" on it -- it's not hidden in some extra-long twin mattress somewhere. Harvard invests that money in a variety of places, including with a number of the large venture capital firms that make the Valley go round. The VCs then hand that money to entrepreneurs, who make (sometimes) useful new products. It works in part because Harvard has a 25+ year time horizon for its investments -- it can fund a startup today and not worry about liquidity for a decade. Harvard's bet is that in a decade, the next Uber will IPO and Harvard will get its funds back, plus a return. As a nice side-effect, entrepreneurs get funded, companies get built, etc.
TL;DR: Investing is not "sitting on" money -- it funds other useful activities.
Re: Is It Time to Tax Harvard’s Endowment?
#44This is already subsumed by Betteridge's Law of Headlines anyway, but I'm tempted to propose a new "Internet law" that says "For any question that starts with 'Is it time to tax ...' the answer is always 'No'".
Re: Is It Time to Tax Harvard’s Endowment?
#45Earlier quoted context omitted.
Yes, Harvard disproportionately has many wealthy people compared to the population at large, but it also provides free educations to large numbers of people. Last I checked, the cutoff was around 60k (meaning, if your family makes less than 60k, Harvard will foot the entire bill). The challenge of overcoming this skew towards wealthy students has more to do with education in general and recruitment than the price tag…
Harvard does this to maintain it's rankings not because there operating a charity. If the goal is to educate people with tax payer money giving lot's of it to a private group who then goes and spends a tiny fraction of that educating high achieving poor people is a ridiculously inefficient use of public funds.
>Harvard does this to maintain its rankings not because they're operating a charity
I disagree. I'm not saying that the tax exemptions are the best or justified or anything, but Harvard has consistently been one of a few leaders in financial aid, dragging other schools with them. Harvard could have excellent rankings regardless of financial aid, but provides great financial aid to get the best students. When such a small fraction of the money comes from tuition, it just doesn't make sense to try to squeeze every last penny out of tuition and force less wealthy students out in the process.
Re: Is It Time to Tax Harvard’s Endowment?
#46I don't have any objections to the Harvard endowment being so large. What this article doesn't mention, however, is that there is a growing trend of corporations and the wealthy buying questionable research in order to achieve political/business goals, more and more educational institutions are becoming depended on this kind of income. This sort of thing should probably be taxed (if it's legal to begin with). (This is not specific to Harvard, Harvard is probably least guilty of this, actually).
Re: Is It Time to Tax Harvard’s Endowment?
#47Earlier quoted context omitted.
>yet only 20% of Harvard's undergraduate class pays no fees Unfortunately I think this is mostly an issue of exposure. It is probably harder for most Andover Academy students to get into an Ivy than it would be for a similar student from a rural school, but most rural students don't know that. If the guidance counselors at high schools educated their students about their options many more of them would likely apply t…
Why would it be harder for a student from an elite boarding school to get into an Ivy than someone from a rural school? I would say the opposite, in no small part based on the evidence that at least supports a strong correlation.
These schools value variety (or diversity, if you prefer) in their classes. They could fill up entirely with valedictorians from NYC, or with rowers from New England boarding schools, or with some other well-represented population, if they so chose, because every single member of those populations applies to one or more Ivies. Because they get very few applicants from farming communities, the rural South, Indian reservations, etc., those who do apply might get in with less impressive SAT scores or "extracurricular activities" than well-represented groups.
If this is news to you, I suspect you haven't thought much about these issues.
Re: Is It Time to Tax Harvard’s Endowment?
#48It is disturbing that the author so lightly morphs a tax exemption into a taxpayer subsidy. As if the natural state of things is for the government to tax everything and whatever it doesn't is being subsidized.
This was my biggest problem with the article, he also goes on to compare direct funding for public university vs tax breaks on the private university, but completely ignores that public universities ALSO have endowments which are also not taxed, and should also be factored into the equation. Obviously Harvard's still shadows everyone else, but he isn't comparing apples to apples.
For instance, the school with the second largest endowment? University of Texas $25 billion.
Re: Is It Time to Tax Harvard’s Endowment?
#49Earlier quoted context omitted.
Why would it be harder for a student from an elite boarding school to get into an Ivy than someone from a rural school? I would say the opposite, in no small part based on the evidence that at least supports a strong correlation.
These schools value variety (or diversity, if you prefer) in their classes. They could fill up entirely with valedictorians from NYC, or with rowers from New England boarding schools, or with some other well-represented population, if they so chose, because every single member of those populations applies to one or more Ivies. Because they get very few applicants from farming communities, the rural South, Indian rese…
It's a little disingenuous to say it's easier though. Sure if you had someone with the same SAT scores, fencing prowess, IB classes, who also spent the summer prior to her senior year interning at the ACLU and was born and raised on Indian reservation in South Dakota she'd have a much easier time getting into Harvard than a wealthy student with a similar record who went to Phillips Exeter. But to put it mildly it would be far more difficult to build such a record for the former than the latter.
Re: Is It Time to Tax Harvard’s Endowment?
#50Earlier quoted context omitted.
What would "meat" look like to you? Suppose you were to start "a hedge fund with a university attached to it", in order to use the university's non-profit status to minimize paying taxes. What would that look like? Would you set up need blind admission, in order to provide better cover to justify the hedge fund? The article points out that the non-profit status means that "Princeton received $105,000 in tax benefits…
> Suppose you were to start "a hedge fund with a university attached to it", in order to use the university's non-profit status to minimize paying taxes. What would that look like? As long as all the funds went towards the chartered goals of the non-profit, it would look like a really good idea for sustainable funding. I don't see any reasonable basis on which the article's comparison makes sense. They compared the t…
"To look at it another way, the private university provides what most people consider a "better" education without receiving any public funds; clearly we need more such institutions if possible."
If Harvard were taxed, would it still provide better education?
For accounting purposes, what's the difference between the non-profit status and a subsidy on the equivalent service provided by a for-profit company? Because I don't see a difference. It's the same as having a deduction on my taxes vs. paying less taxes, no? The end result on what I pay is the same.
Which is why I think that tax free status on "investments that range from stocks and bonds to California wine vineyards" does count as being similar to a subsidy on the for-profit equivalent.
Which is why I see this as a policy question - is it better to have one person with a "better" education at a private school, or use the same money to have two people receive a college education at a public school?
I don't dismiss your point regarding past evidence. However, I think that's symptomatic of a different structural failure, where the cult of hiring MBAs running something "like a business" has taken over schools, health care, government and other organizations which should not have the high rate of failures seen in businesses. (Eg, Cooper Union.) That topic is quite outside of this discussion, and I'm willing to accept your conclusion.
Regarding "looking at the contents of someone else's bank account and wishing it was yours" - that's a wealth tax, and it exists in France, Norway, Spain, and several other countries, so it does make sense to some.