Friday, August 18, 2017
Herwig Schlunk (Vanderbilt) has published Why the Charitable Deduction for Gifts to Educational Endowments Should Be Repealed, 71 U. Miami L. Rev. 702 (2017). Here is the introduction (footnotes omitted):
The country’s collective patience for coddling private institutions of higher education is waning. At the local level, there is an effort afoot to challenge the tax-exempt status of Princeton University. At the state level, legislators in Massachusetts and Connecticut have suggested imposing taxes that would target Harvard University and Yale University. At the federal level, a number of proposals have been floated that would impact the tax treatment of universities and their endowments, including imposing an excise tax on endowment income.
In this paper, I will add my voice to the chorus of those who would change the rules of federal taxation as applied to institutions of higher education. But rather than focus on the taxation of such institutions directly, I will instead focus on the propriety of granting such institutions the ability to receive gifts that are tax-deductible by the donor. I argue that in the specific and limited context of gifts made to university endowments, an adequate defense for providing the tax preference of a charitable contribution deduction is lacking.