“While state schools suffer and middle-class students drown in loans, elite universities are only getting richer.” …
It will never happen. Too many of the powers that be are alumni of Harvard and other elite schools. This would include many liberal policy makers who talk about social justice but would bend over backwards to prolong the hegemony of this elite group of colleges.
Sure, why not? I say tax everyone that isn’t me.
Yes…we are all paying 35% of all the amazing FA they give, while our public uni’s struggle.
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- If our government is making budgets based on everyone paying the full amount of their taxes with no deductions, they are fools (and so are we for electing them). I doubt that's the case though; so, no, those deductions are not taking anything away from those of us who are not donating. It wasn't our money to begin with anyway; it's the donors' money.
- The donations help kids who would not otherwise be able to afford to attend those schools. And colleges do a lot for the world and the US already; taxing them would only make it more difficult for them to accomplish those things. (research advances, financial aid, education itself, etc.)
- Larger point: the government (and other people) does not own an individual's money. Remember: liberty and property. So the implication that the donors somehow "owed" that money to us/the government is absurd. They made the donation, so they get the benefit of it. I'm glad there are deductions, or people would be less likely to donate. And no, the government does not know how to spend or invest our money better than we do... nor do they, or should they, have the right, beyond established standards.
(that sounded far more aggressive than I intended. I should have added “IMHO” about a dozen times. hehe)
In reality, a “tax deduction” is a budget item when the law is passed. So yes, it is known how much tax is forgone with this deduction…and the rest of us make up the difference.
Charity is fine, but the giant hoards of endowment $ are a whole other kettle of fish.
Unfortunately, if you don’t give Paulson the deduction, he won’t give the $. And you can’t direct other people’s donations.
I’m just tired of paying more more more (tuition, taxes…)
I feel you. Hopefully some mechanism like competition (online maybe?) can help to bring down the price of college. Or we could do away with the federal loans, which some believe have given schools an excuse to keep raising prices. Then the question will be:
Is it better to be able to go to today’s high-priced college because there is relatively easy access to ample loans (and the resulting gigantic debt to repay); or would it be better to avoid the huge debt because colleges cost somewhat less, albeit with some unable to afford college at all because they cannot secure the loans? (so which is worse: Big Debt or Lack of Access?)
Here’s the way I see it:
When I went to college in 1973, my parents paid the full-fare tuition, room and board of about $5,000 per year for a private college. My father made $60,000 a year and we were considered to be upper middle class. In 1973 dollars, my family was roughly paying 1/12 of our gross income for college costs – and my mom and dad did it without loans or the need of financial aid.
Using the same metric, what does that look like in 2015?
PUBLIC COLLEGE: If tuition, room and board equals $22,000 per year for an in-state student, a family would need to gross $264,000 to equal the same ratio as it did for my family in 1973.
PRIVATE COLLEGE: If tuition, room and board equals $65,000 per year for a student, a family would need to gross $780,000 to equal the same ratio as it did for my family in 1973.
The cost of both PUBLIC and PRIVATE education now exceeds the income of many families. So, what can be done to correct the issue — that’s really the question that needs to be addressed.
Colleges that give substantial financial aid to families like HYP are basically trying to maintain the same ratio from 1973. For example: In 2014, our family’s gross income was about $185K including tax deferred retirement contributions and we paid roughly $16,000 per year to Harvard and Yale for our kids tuition, room and board – or 1/12 our income.
When a college is giving money away, such as HYP do to keep that 1/12 ratio, I don’t see why those institutions need to pay taxes on their endowment.
All this talk about “tax deductions” fails to really put a dent into the growth of Harvard and Yale’s endowment growth. Institutionally, they invested EXTREMELY well. Sure the millions they pulled in along the way in various capital campaigns helped – but they were incredibly savvy and made fantastic investments. Thus they now reap the rewards – although I have to admit seeing Yale’s endowment rise from $1B when I graduated to ~$24B today – made its appeals to my giving sound rather hollow…
But I don’t think H is trying to keep it to 1/12 for everybody… In fact at $60k you likely pay 0. At $780k you pay full freight. Heck, at &250k you pay full freight!
I just think that perhaps there needs to be a limit to tax exemption on investment income growth. Too many schools struggle while a few hoard away billions. I have to share with my less fortunate fellow Americans each year…Perhaps the “excise tax” would be earmarked for college fed funding. Of course congress could never keep their hands off of it!