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Victor Fleischer writes in the NYT that university endowments are exempt from corporate income tax because universities support the advancement and dissemination of knowledge. But instead of holding down tuition or expanding faculty research, endowments are hoarding money. Last year, Yale paid about $480 million to private equity fund managers for managing about $8 billion, one-third of Yale's endowment. In contrast, of the $1 billion the endowment contributed to the university's operating budget, only $170 million was earmarked for tuition assistance, fellowships and prizes. Private equity fund managers also received more than students at Harvard, the University of Texas, Stanford and Princeton.
Fleischer, a professor of law at the University of San Diego, says that as part of the reauthorization of the Higher Education Act expected later this year, Congress should require universities with endowments in excess of $100 million to spend at least 8 percent of the endowment each year. Universities could avoid this rule by shrinking assets to $99 million, but only by spending the endowment on educational purposes, which is exactly the goal. According to a study by the Center for College Affordability and Productivity a minimum payout of 5 percent per annum, would be is similar to the legal requirement for private and public foundations. "The sky-high tuition increases would stop, and maybe even reverse themselves. Faculty members would benefit from greater research support. University libraries, museums, hospitals and laboratories would have better facilities," concludes Fleischer. "We've lost sight of the idea that students, not fund managers, should be the primary beneficiaries of a university's endowment."
(Score: 2, Interesting) by Anonymous Coward on Friday August 21 2015, @07:15AM
Instead of making them exempt from corporate income tax, make all those expenses that support the advancement and dissemination of knowledge (like paying scientists and teachers, buying experimental equipment, paying publication fees or subscriptions of scientific journals, etc.) deducible from corporate income tax. Then universities that spend all their money on such stuff still pay no money, but any money that is used otherwise will be taxed normally.
(Score: 0) by Anonymous Coward on Friday August 21 2015, @07:17AM
Err ...
s/still pay no money/still pay no taxes/
(Score: 3, Interesting) by penguinoid on Saturday August 22 2015, @12:16AM
This seems like an excellent idea, and I'd even suggest expanding on it: Any business, corporation, or individual can deduct expenses related to research, education, etc, with no special treatment for universities. There should also be some strong incentive to have public patents.
RIP Slashdot. Killed by greedy bastards.