Latest News and Comment from Education

Wednesday, February 24, 2016

The rich get richer: Should the wealthy get a tax break for endowing elite universities? - LA Times

The rich get richer: Should the wealthy get a tax break for endowing elite universities? - LA Times:

The rich get richer: Should the wealthy get a tax break for endowing elite universities?

Phil Knight
Big donor, and your partner in charity? Nike co-founder and Stanford benefactor Phil Knight.
 (Rick Bowmer / Associated Press)


 Stanford University on Wednesday announced the largest donation in its history: a $400-million gift from Nike founder Phil Knight to endow a graduate program modeled after the Rhodes Scholarships.  

As a U.S. taxpayer, are you suffused with personal pride about this? Perhaps you should be, because you're paying for much of it. Assuming that the billionaire Knight, an alumnus of Stanford's business school, is charged the top marginal federal tax rate on his income, the donation will give him a $158-million tax break.
That's your share.
Knight's gift and its tax consequences should reignite a dormant debate over how much the endowments of America's richest universities cost taxpayers. Tax deductions for donations are only one type of hidden public subsidy that nonprofit universities collect; their investment gains also are untaxed, as is their real estate. 
These benefits arguably contribute to America's rising crisis in income and wealth inequality. Elite universities chiefly educate the children of the wealthy and upper middle class; institutions that educate working-class kids are starved of resources by comparison.
data survey by Nexus Research last year put the mismatch in stark terms by comparing the implicit per-student subsidy at rich private institutions with the government funding of public colleges in their state. In California, it showed that Stanford received about $63,000 per student, while UC Berkeley got $10,500, Cal State Fullerton got $4,000 and Fullerton Community College $8,100.
The figures reflected estimated exempted capital gains taxes for the private schools and government appropriates for the others; in the interest of full disclosure, Nexus is partly The rich get richer: Should the wealthy get a tax break for endowing elite universities? - LA Times: