Thursday, August 8, 2019

Quinn: Wealth Accumulation at Elite Colleges, Endowment Taxation

Mae Quinn (Florida-Levin College of Law) posted Wealth Accumulation at Elite Colleges, Endowment Taxation, and the Unlikely Story of How Donald Trump Got One Thing Right to SSRN (Wake Forest Law Review, forthcoming).  Here is the abstract:

President Donald Trump has declared war on immigrants, diversity, and those who dare to dissent. Rooted in resentments about who people are, where they were born, and what they believe, these executive-led assaults are dangerous developments in the modern era. However, in the course of Trump's many retrograde tirades, he has somehow managed to get one thing right-too many elite private colleges in the United States, considered nonprofit entities, have amassed way too much wealth.

This Article recounts this unlikely story, including how the Trump Administration's 2017 endowment tax could work to advance diversity. The new endowment tax penalizes private colleges for stockpiling assets. In response, potentially impacted universities have argued they are victims of an unfair conservative conspiracy intended to target liberal ideology. But the data demonstrates that this is not true. And concerns about rich colleges hoarding their resources have come from both the right and the left.

Moreover, Trump's endowment tax could be seen as an opportunity and invitation to increase egalitarianism and equity in this country. If rich colleges simply utilize more of their massive savings to further social justice, impact poverty, and enhance public good-particularly in their own at-risk communities-they will not only avoid federal taxation but also begin to address critiques about their elitism and greed. In doing so such universities would not only thwart Trump and his tax but stand with vulnerable groups who are the true victims of the Trump Administration's ever-expanding conservative attacks. 

Nicholas Mirkay

https://lawprofessors.typepad.com/nonprofit/2019/08/quinn-wealth-accumulation-at-elite-colleges-endowment-taxation.html

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Comments

"If rich colleges simply utilize more of their massive savings to further social justice, impact poverty, and enhance public good-particularly in their own at-risk communities."

Smacks of the elitism she complains about. How about we don't let college administrators decide what social justice is. I bet they are not very good at it. I say they should pay taxes at full corporate rates, and let our elected representatives decide what to do with the money.

Like the Hospitals, the colleges have become profit seeking enterprises. They should be taxed as such. The line between taxable educational enterprises and charitable ones should be simple. Charities don't charge tuition or fees.

I'll bet Harvard would decide to pay the tax.

Posted by: Walter Sobchak | Aug 15, 2019 10:47:33 PM

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