Is it political to suggest that all non-profit orgs be treated similarly with regard to taxes?
I don’t think so, particularly in a discussion about the merits of taxing certain non-profits.
This is the extreme end of the spectrum. If a student currently has a $25k stipend, to get to $100k income, tuition would have to be $75k. At most state schools, OOS tuition will be less than half of that and in-state tuition can be under $15k per year. Then, when students have passed their qualifying exams and are only doing research, some programs will let students enroll in only 1 course(dissertation residency or equivalent) and so would only have the cost of 3 credit hours waived per semester.
How would we even tax non profits if that was the goal? We normally apply taxes to earned income not gifts. Most of the income to non profits is gifts. Are we going to start taxing gifts?
Lets say we don’t tax gifts but we agree to tax only earned income for non profits. It would only be fair to let them deduct expenses. Virtually all non profits would then be in the red and pay no taxes since expenses almost always exceeds earned income. Very difficult problem if the goal is to tax non profits.
Come on @ohmomof2, you are smarter than that.
It is no coincidence that @collegedad13 chose the Church, and Americans for Prosperity. And not say, Planned Parenthood, or the Southern Poverty Law Center.
If the Southern Poverty Law Center ran a chain of cafes (i.e. a revenue producing activity not related to their mission), they WOULD be taxed.
That’s already the law.
He included both political parties. Honestly there’s no THERE there.
Let’s stipulate that the SPLC and PP are also included in “non profits” and move on?
This thread is skating close to thin ice.
In your $30,000 COA scenario, does FA and merit aid still exist? If so, who gets it? fwiw- there is no merit aid at Harvard or any ivy.
Harvard is really not very many undergraduate students. It is just an example to use, in my opinion. It’s not necessarily a very good example, because if you are in the teeny tiny percent that gets admitted, they will try and make it financially possible for you to attend. CSS profile was my example of that.
I am happy to support a universal maximum college COA of $30,000, if we still have a sliding scale for some familes unable to pay that much. Does that sound okay to you?
"How about a tuition that is commensurate with true inflation over the last 30 years rather than a rate of growth of tuition that is more like 3 to 4 x inflation. "
So, you want BIG government? You want the government to step in and determine what the proper rate of inflation is for educational institutions? Right now, it seems like it is what the market will bear, you know, capitalism. There are other options available to all families than sending their children to elite educational institutions. Nobody HAS to send their kid to Harvard or that ilk, assuming they can get in anyway.
How about healthcare? Or other industries that are raising their costs more than the overall rate of inflation? How about movie ticket prices, Disney ticket prices, cable tv, prescription drugs, the cost of owning a home? All have risen more than the overall rate of inflation. Shall we dictate prices on all goods then? That sounds like communism.
@doschicos Great analysis! 
Hucklebury, any economist would look at all the single digit admissions rate colleges and conclude that tuition is way too low.
But that’s besides the point.
I’m not sure what “bad behavior” you are referring to. But nobody walks into your house, forces your kid to apply to Harvard, and then vacuums out the money from your wallet and checking account.
If you don’t think Harvard is worth the money- don’t apply. If you can’t afford to send your kid there- don’t apply. There are only another 3,000 or so colleges in America to choose from. Choose one of them.
What class envy are you talking about? I don’t envy people who make 200K per year but can’t seem to figure out how to pay for college, and I certainly don’t envy people who make 30K per year. I think people make choices- about where to live, what to do professionally, how many kids to have, what kind of house to buy, how much mortgage to take on- and all of these choices have consequences. I have neighbors (women) who left the paid work force 12-15 years ago to raise their kids and they are bitter, angry and hostile now.
Why? Because they need that second income to pay for college. And their options range from part time yoga instructor to receptionist at the local health club and the like.
Why? Because you don’t leave a $90K job as a middle manager in a corporation and take off 15 years and waltz back in to your job. You don’t step off the partner track at a big law firm making $125K (at the time) and get back on a partner track if you haven’t done a single legal thing in 15 years AND let your bar membership lapse AND not keep up with your continuing education requirements.
Their bitterness is sad (and the hostility- mostly directed at women like myself who took 6 weeks off after the kids were born and went back to work) but really- who guarantees you a decade and a half out of the paid workforce and then getting your spot back? nobody.
Choices. They have implications down the road.
If life has dealt you a bad hand- children with special needs, ill spouse, chronic illness- I’m glad we live in a society where we feel responsibility to take care of vulnerable families. But I don’t think our social contract requires Harvard to cut their tuition in half so that your 200K family can afford to send their kid to Harvard without borrowing, or having saved.
I don’t know if it is true, but I have read that in the 60s and 70s, a family with one professional wage earner (doctor, lawyer, etc) could send a child to Harvard with current income.
I went to a state flagship in the 70s. My tuition was less than my sorority dues. That was when the state was willing to invest in its universities. That is no longer the case in that state. The budget is cut, rather than increased as it was in my time there.
I did the analysis at one time and if you divide Harvards expense budget by the number of students you come up with a cost per year per student of around 250k . No one is paying close to that. So I am not sure that we can say any number is too high relative to the true cost of an education.
https://www.harvard.edu/media-relations/harvard-issues-annual-financial-report
http://www.chronicle.com/interactives/tuition-and-fees shows historical tuition for various colleges. You can optionally check a box to show inflation-adjusted numbers, and include room and board for 2008 and newer numbers.
Here’s a chart of tuition/room/board for Yale from 1939 to 2015, in nominal and inflation-adjusted terms. https://yalealumnimagazine.com/articles/4074-the-cost-of-yale-a-history I doubt Harvard was much different.
@JHS, list price is not what students actually pay. In 1939 most everyone paid rack rate. I recall a Yale admin saying that if they removed FA, the rack rate would be around $30K.
^About half of Yale undergrads actually do pay list price.
It’s like you know me, but without the bitter part, and for some reason I’m still paying the annual inactive dues; can’t fully let go. (Just here learning the ins and outs to make the most of things for my kids.)
That’s my recollection. I remember one of my full-pay classmates complaining with some bitterness that Wesleyan’s tuition had increased to the point where it “cost almost as much as a new car.” And, I don’t think they were talking about a BMW or Mercedes; a Lincoln would have been a very respectable high end car in those days.
I agree with @JHS that the move to tax tuition waivers and scholarships for grad students would be immediately devastating to research universities (and those that use tuition waivers to pay for grad students to teach undergraduates).
@lookingforward and @hebegebe, the motivation for these clauses in the bill is inherently political. (See for example http://thehill.com/policy/healthcare/359669-red-state-lawmakers-find-blue-state-piggy-bank for the big picture). If the concern were to tap the endowments of non-profits that have “too much money”, the Catholic church and probably incredibly well-funded evangelical megachurches would be in the cross-hairs as well, but they are not.
But, if we want to proceed under the questionable assumption that the merits are what is being debated, the focus ought to be on the net costs/benefits of not taxing research universities and their cheap labor (grad students).
First, the great research universities (or some of them) have been integral to economic growth in the last 30-50 years or more. Although the studies described are dated, Stanford alumni and professors have started companies that had 5.4 million employees and had revenues of $2.7 trillion (in 2014) and MIT alumni and professors had started companies that had 3.3 million employees and $2 trillion in annual revenue (in 2012). By 2017, these numbers are likely a lot higher. It is hard to see any significant economic benefit to the country of a modest tax on these institutions or from taxing grad student tuition waivers.
Second, the broader issue is, as I said in an earlier post, is how we as a country finance the excellence in higher education that has led to substantial (but very unevenly distributed) economic gain for the country. If we take this steps like these to attack elite institutions (and I agree that with @toooldforschool that this is likely only a first step), we are likely to be weakening the economy in meaningful ways. As a polity, we don’t have an appetite for investing for future benefit (education, infrastructure) at the moment, so moves to weaken our great research universities as well as cuts in the federal budget to basic research (see https://www.washingtonpost.com/opinions/americas-miracle-machine-is-in-desperate-need-of-well-a-miracle/2017/05/05/daafbe6a-30e7-11e7-9534-00e4656c22aa_story.html?utm_term=.c97ef53e2be0) will weaken the economy overall.
Third, I suspect that the problem has to do in part with the uneven distribution of wealth that has resulted from the companies founded by alumni and professors (and generally from highly educated people starting tech and biotech companies). Rather than attack economic growth and have a smaller pie for all, we should be thinking about how to even out the distribution.
It’s not obvious the the method we have of financing research institutions via tax-deductible donations to charity is the best way to maintain academic excellence/high quality research, but it seems harder to maintain excellence in democracies in which the vast preponderance of funding comes from government. In Canada, for example, they could never concentrate funding in a field to build something like the Broad Institute at MIT (in genomics research) but would spread funding around to all provinces and to various schools in each province. Incidentally, I’ve talked with a number of Canadian professors and Canadians generally about this and they generally a) agree; and b) feel proud of the egalitarian approach even though it leads to weaker research output or economic growth. China can probably finance major directed concentrations of research effort, but China isn’t a democracy. Current authoritarian impulses in the US notwithstanding, I prefer democracy and hence do not want to weaken our system of funding excellence in academic research.
An article in the paper this morning made me focus on another provision – the 20% excise tax on salaries over $1 million paid by nonprofits. Some colleges may have no one in that category. At some, it may only be the president, the football coach, and the basketball coach. And at some universities with large, high-quality medical systems, it could be dozens of doctors and managers (plus maybe a coach or two and a president). It looks like it only applies to five people at a time, but once a person is on the list that person never comes off, and someone else may still join the list in a year in which the new person is one of the top earners. It’s projected to raise $3.6 billion in revenue, so we are talking about close to $2 billion of annual compensation.