<p>It would be bad policy to base it on a single case, to wit Harvard.<br>
Taxing earnings in excess of an institution’s needs for its operating budget (or above a certain threshhold) would need to take into account 1. periodic fund-raising campaigns that provide temporary excesses and 2. the savings such institutions make in order to build new buildings and programs.
Harvard has made known its plans for Allston which is something like a 25 year plan during which it not only raises money but also taxes its own faculties (this has been one of the reasons why the Faculty of Arts and Sciences was so unhappy with Larry Summers). Once the university actually begins building, a lot of the “excess” will likely disappear. Other colleges and universities similarly have plans for adding buildings and programs, though perhaps not as ambitious. Any scheme to tax their excess earnings would have to take into account the way they finance their expansion.</p>