Time To Tax Harvard?

As a nation, we subsidize some of the wealthiest institutions in the Western world: fancy colleges. Should we maybe stop? Slate makes the case:

normal hedge funds have to pay taxes on their earnings. Because it’s a nonprofit, Harvard doesn’t. And since bestowing tax exemptions is the same as spending cash from the government’s perspective (budgeteers call them “tax expenditures” for a reason), that means the American public effectively subsidizes Harvard’s moneymaking engine. The same goes for Stanford (endowment: $21.4 billion), Princeton (endowment: $21 billion), Yale (endowment $23.9 billion), and the country’s other elite institutions of higher education.

Aiding wealthy research universities that cater to largely affluent undergraduates might have been acceptable in a more flush era. But at a time when state colleges are still suffering from deep budget cuts that have driven up tuition and politicians are stretching for ways to make school more affordable for middle-class students, clawing back some of that cash to spend on needier schools is starting to sound awfully appealing. Which is why it might just be time to start taxing Harvard and its cohort.

This is an interesting argument. My Robin Hood impulses lead me to agree, at least at first. Harvard’s affluence is great for those affiliated with the institution — but who are those students, after all? Aside from the fact that some of them are my closest friends. They are the creamiest cream-top cream. Many of them are legacies. Many of them are rich.

Yet when they graduate, they’re not all, or even disproportionately, high-performing. Nor are they all, or even disproportionately, kind, grateful, and ready to give back to the world, at least not according to one alum:

Even though there was a distinct liberal, do-good slant at Harvard, we were all undeniably snooty. In a place where jocks complained about asymptotic strippers, we reveled in our seemingly superior intellectuality. Just by virtue of being at Harvard, we convinced ourselves that we were the smartest, most accomplished, and best-looking scholars and future leaders of America… the crème de la crème.

There were all types of snooty, from grunge snooty to Upper East Side snooty. There were artists who flocked together in their rebellion and harangued the world of conformists and sellouts. There were well-heeled suits and pearl-wearing debutantes-to-be who hosted chardonnay parties and talked about dollar cost averaging. Beat poetry coexisted with popped collars; debates about Burma with tirades about taxes.

Snootiness was commonplace, whether it was intentional or not.

This is not meant as a dig at Harvard alone. The school works as a potent symbol of many other elite, super-wealthy, perhaps overrated institutions, one of which I attended. Many or most of these colleges use their money well when it comes to their own students, but is that a sufficient reason for asking the nation to subsidize them instead of asking them to give back some amount to the country as a whole?

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.