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Is It Time to Tax Harvard’s Endowment?
51–60 of 96 posts
Re: Is It Time to Tax Harvard’s Endowment?
#52Earlier quoted context omitted.
What's the difference between me giving you $X and me ever so generously not taking $X from your bank account? Also note the phrase "non-profit". This isn't a benefit we give to everyone; you have to have a registered non-profit that works towards some charitable cause (such as, in this case, giving people a free or low-cost education). If you want to argue that non-profit organizations should not exist, or argue for…
The difference between your two scenarios is that in one scenario I have $X more than in the other scenario. In my two scenarios, the money you have at the end is the same for both. As for "If you want to argue," I'm not arguing anything . I'm asking what the difference is between a direct subsidy and a tax exemption, as the comment I replied to is complaining about the author conflating the two.
> In my two scenarios, the money you have at the end is the same for both.
How do you figure? Could you elaborate on the baseline assumptions you're making there?
Note that the universities getting paid tax money collected from taxpayers don't pay taxes themselves either.
Re: Is It Time to Tax Harvard’s Endowment?
#53It 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 sec…
"completely ignores that public universities ALSO have endowments which are also not taxed, and should also be factored into the equation"
About 2/3rds of the way through the first page, the author addresses not only that topic, but even references the endowment of the University of Texas system. I quote:
> More substantively, Schneider and Klor de Alva’s report probably exaggerates the overall subsidy gap between elite private and state colleges to a degree. For instance, it doesn’t count the tax savings that some large state institutions enjoy on their own endowments—the University of Texas at Austin, for instance, is part of a nine-school system with a $25.4 billion endowment, while Rutgers has more than $900 million to its name. The study also doesn’t consider subsidies from the federal Pell grant program, which mostly benefit lower- and middle-income students at public institutions. And, perhaps most importantly, it probably overstates how much money colleges are saving thanks to their nonprofit status each year, because it treats all increases in the value of their endowments as taxable income, whether or not they were actually realized.
Re: Is It Time to Tax Harvard’s Endowment?
#54Earlier quoted context omitted.
The difference between your two scenarios is that in one scenario I have $X more than in the other scenario. In my two scenarios, the money you have at the end is the same for both. As for "If you want to argue," I'm not arguing anything . I'm asking what the difference is between a direct subsidy and a tax exemption, as the comment I replied to is complaining about the author conflating the two.
> In my two scenarios, the money you have at the end is the same for both. How do you figure? Could you elaborate on the baseline assumptions you're making there? Note that the universities getting paid tax money collected from taxpayers don't pay taxes themselves either .
The article counts tax exemptions as "subsidies." The comment I'm replying to calls this "disturbing." Therefore I'm asking what the difference actually is between a tax exemption and a more overt subsidy.
For an example, let's say you'd normally pay $1 million in taxes. I could subsidize you by paying you $500,000. Or I could give you a tax exemption worth $500,000. The net result on your finances is the same. So I'm wondering what mhb sees as being the difference between the two, such that it's "disturbing" to mix them up.
Re: Is It Time to Tax Harvard’s Endowment?
#55This 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'".
It's interesting to see a group of people who self-identify as being part of the hacker community - through their presence here - tacitly endorse violence to achieve their ends. And make no mistake about it, taxation is violence.
Don't believe me? Try not paying "your" taxes sometime, and wait and see how long until the State sends men with guns to arrest you. And then try defending yourself against these men with guns.
We can do better than this. We should be promoting non-violent self-government, not embracing a system which is completely predicated on the use of violent force to ensure compliance.
Re: Is It Time to Tax Harvard’s Endowment?
#561. If you're going to tax universities, then you need to tax churches too. Good luck. 2. If you're going to tax non-profits, then why have non-profits? 3. Do we really want to penalize fiscally responsible organizations when even governments are going bankrupt? What values are we trying to support here?
You don't have to treat universities and churches the same., the tax code specifically defines which organizations are tax exempt. Churches and universities are "501(c)(3) organizations", i.e. "Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."
You can just amend that law to delete "educational", which would remove the tax exemption for universities, but keep it for churches.
It is already the case that there are organizations which don't pay out dividends to owners (so they are "non-profit"), but which are not tax-exempt. One example which has been discussed on Hacker News is foundations set up to accept donations in order to fund development of open-source software.
Re: Is It Time to Tax Harvard’s Endowment?
#57Earlier quoted context omitted.
No kidding. "And since bestowing tax exemptions is the same as spending cash from the government’s perspective". I physically shuddered as I read that. The authors entire argument falls apart right there.
How is that wrong? The government decided not to tax these college endowments because they were considered a public good. That decision had a direct effect on the government's budget - a cost.
Indeed that's true. A government in a country which decides to absorb all wealth created by its citizens (100% taxation) would bear a cost should it allow any dispensation. I guess there'd be a powerful debate on whether the latter was justified and fair.
Re: Is It Time to Tax Harvard’s Endowment?
#58Earlier quoted context omitted.
> In my two scenarios, the money you have at the end is the same for both. How do you figure? Could you elaborate on the baseline assumptions you're making there? Note that the universities getting paid tax money collected from taxpayers don't pay taxes themselves either .
The article counts tax exemptions as "subsidies." The comment I'm replying to calls this "disturbing." Therefore I'm asking what the difference actually is between a tax exemption and a more overt subsidy. For an example, let's say you'd normally pay $1 million in taxes. I could subsidize you by paying you $500,000. Or I could give you a tax exemption worth $500,000. The net result on your finances is the same. So I'…
You only need to read the second sentence of his post. It couldn't be any clearer.
Re: Is It Time to Tax Harvard’s Endowment?
#59Earlier quoted context omitted.
The article counts tax exemptions as "subsidies." The comment I'm replying to calls this "disturbing." Therefore I'm asking what the difference actually is between a tax exemption and a more overt subsidy. For an example, let's say you'd normally pay $1 million in taxes. I could subsidize you by paying you $500,000. Or I could give you a tax exemption worth $500,000. The net result on your finances is the same. So I'…
You only need to read the second sentence of his post. It couldn't be any clearer.
That doesn't explain what the difference actually is, merely a perceived consequence of mixing it up.
Re: Is It Time to Tax Harvard’s Endowment?
#60Earlier 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…
Am I using the hedge fund profits to buy a yacht, or run a university? If the latter, then good!
Since I don't own a boat, I wouldn't mind if they bought a bunch of yachts.
Since I live in Cambridge, I care very much how much gets fenced into official Harvard only property.