I have a better suggestion - lets abolish all money. No money = no inequity, yah?
Apologies for the tirade, but the level of dishonesty and/or outright stupidity in these published analyses is astonishing. Here’s a few points -
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On the first day of Tax Accounting 101, students learn this - the income tax is a tax on income. For a corporation, Income = Revenues – Expenses. That means that they deduct their expenses. In other words, a university would subtract the cost of salaries, buildings, financial aid, food served, maintenance, etc., before paying tax on what’s left. Since we know they currently operate on a non-profit basis, this means that their effective tax rate on the amount they spend from their endowments would be zero since it’s all spent.
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On the 2nd day of Tax Accounting 101, students learn that only realized gains are subject to tax. This means that a lot of the gain on investments, such as stock holdings that aren’t sold, wouldn’t be taxed either, and the realized gain would probably be taxed at long term capital gains rates, not ordinary income rates.
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Making these two simple adjustments lowers the “benefit” of the income tax exemption of endowment earnings dramatically. Instead of numbers like $69,000 or $105,000 per student per year, you get numbers more like $19,000 per student per year for the last decade. Definitely a benefit, but it’s not the enormously misleading number that’s thrown around.
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A lot of the dishonest or incompetent analyses don’t even do this. The Nexus analysis makes an attempt, though they also add in a too high estimate of the donor’s benefit from the charitable deduction. However, they also pull a big fast one to obtain a very high number. They treat the entire amount of federal research grant funding as profit. In other words, they completely ignore the fact that the research grant funding is **spent/b. The Nexus study makes the excuse that they don’t have the data to know how much is spent, but that is pure BS. The government doesn’t allow universities to make a profit off of their grants, so it’s essentially 100% spent. This allows Nexus to add a few hundred million dollars a year per school to their benefit number.
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The lead author of the Nexus study is Jorge Klor de Alva, “former president of the University of Phoenix”. The Nexus Research Policy Center itself was created by the University of Phoenix to support the for-profit college sector.
Taking advice from them is like taking investment advice from Bernie Madoff. Higher education has its fair share of problems, but the worst of the for-profit college sector has built an industry around corrupt and predatory practices. I don’t think any serious person would argue this.
- People in the peanut gallery complain when university investment managers do a bad job and lose money. They complain when they make too much money. It’s like Goldilocks and the Three Bears … can’t make too little, can’t make too much … what’s the “right” amount of investment return???
Frankly, I wish the peanut gallery would shut up. The world has too many people who do nothing but sit on their butts and criticize.
This will probably get me banned or my post deleted, but personally I am sick of posters who consistently spew racist crap.
I’m still waiting for any basis you have to offer besides calling people hater.
Basis for what? The fact that some of us don’t really mind the way these schools handle endowments?
There is something bizarre about bashing universities in this manner, especially when people don’t have any experience making real money or what it means to donate it.
Folks should make a hundred million or two and then they’d be well positioned to take on the philanthropists and their beneficiaries. Short of that, it represents mostly ignorance and smacks of simple jealousy.
Do folks think that their current efforts would somehow yield more if universities were looted or are they bitter about the places the current support goes?
cmsjmt -- you had some good points going there. Then you really jumped the shark with this tirade that would make Donald Trump proud.
SMH
That was a continuation of what I said in a previous post, that I would be a lot more impressed if these elite schools were to take all the at risk inner city youths and groom them into great scholars and leaders, instead of just taking those destined to succeed then take credit for their success. But of course this offended some sensitive soul who immediately went into hysterics and screamed racism. What can you do.
This is a touchy subject.
For removal of ivy league name:
It promotes equality and diversity.
It helps reduce bias towards wealth and ethnicity.
It helps the poor and reduces poverty.
It may potentially improve as a whole society because more people will have a good education.
Colleges will be forced to not only focus on profit.
Against removal of ivy league name:
It is unfair for some hardworking students.
It could be detrimental to society as a whole because education quality may worsen.
Less incentive to work hard in high school.
The poor have an easier time getting into a good college.
Colleges may lose some of their prestige.
I started to respond to some of these comments, but they are just too poorly thought through to even try to explain it.
Instead I will just say that the United States has the best universities in the world, and doing something that would jeopardize that status would be dumb. There may be a point that top universities should spend a bit more of their endowment money year to year and hoard less of it, but it would be dumb to do anything harmful to these schools.
The elites look for a nice mix of kids, all competent to fare well at those colleges. If you dilute the tippy tops, it does no one any good. They are opportunities for kids who are qualified.
It’s on that note that some get confused. It’s dicey when anyone suggests some kids only get to an elite for some sort of handout leg-up. Some seem to think a segment of tippy top students are only there for remedial or catch-up opportunities. Think again.
And I think that if some want to speak of taxing or allocating more from the endowments, you ought to learn a little of how these things work today, not assume. Or not take some media article as definitively informing.
I’ve never understand why people called out for racist comments hear criticism as “screaming.” Perhaps it hurts their sensitive ears?
"You don’t say. I’m beginning to think Obama should just stop beating around the bush and declare the Ivy League Religious Institutions. The fervor and loyalty of their worshipers sometimes borderline fanatical. Imagine all these people who spend a lifetime worshiping at their altar, first doing whatever they can to become members of these institutions, then spreading their message(liberalism) far and wide, defending their perch atop the pantheon of elitism anytime they feel it’s under threat and giving generously to ensure their eternal glory. "
I think you’re the one who is obsessed with worshipping the Ivy League. Get real - 98% of people in this country never give one iota’s thought to the Ivy League, much less their policies and whether or not their kids are going to go there. If they think of it at all, it’s “the best school in the US - I guess that’s Harvard” the same way that “the best painting in the world - I guess that’s the Mona Lisa.” You are completely overstating the impact that the Ivy League has on this country and the “fervor” of worship. Have you been hanging around immigrant communities that (understandably) don’t know any better?