This is the problem with liberals in charge

[EvilMonkey]

You have it, but you don't NEED it. However, WE need it to spend on things WE decide are important. "We just want a little" Yeah, right!

http://www.metrowestdailynews.com/state/x2124113777

 

State may tax college endowment money

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By Lindsey Parietti/Daily News staff

The MetroWest Daily News

Posted Apr 30, 2008 @ 12:41 AM

 

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BOSTON — Searching for new solutions to the state's budget woes, lawmakers are considering a tax that could boost state coffers with hundreds of millions of dollars from private university endowment funds.

 

During budget debates Monday night, House members considered imposing a 2.5 percent tax on any endowment that exceeds $1 billion. They voted to have the state Department of Revenue study the proposal.

 

"I don't think it's a good idea, actually, going after endowment funds just because they have a lot of money, but there's no excuse for universities not to work with communities," state Rep. George Peterson Jr., R-Grafton, said yesterday.

 

Peterson, who serves on the Joint Higher Education Committee, said universities such as Harvard need to do more to be good neighbors, including possibly offering payments in lieu of taxes to the cities and towns that host them.

 

"What I found somewhat disheartening was that it got into, 'You're rich, and we're going to tax you because we need the money,' " he said of the debate.

 

Several lawmakers, including Cambridge Democrats state Reps. Alice Wolf and Timothy Toomey, as well as others with wealthy private universities in their districts, spoke in favor of the tax Monday, according to State House News Service.

 

"Why do we want to tax the poor all the time, but we let off the hook the richest of the rich?" said state Rep. Angelo Scaccia, D-Readville. "We're not going to break them. We just want a little."

If the state passes the tax, Wellesley College alone would have to pay $17.5 million each year on its $1.7 billion endowment fund.

 

"I think the amendment singles out higher education among all nonprofit and charitable organizations unfairly. ... Wellesley uses its endowment wisely to support students and learning here," said Mary Ann Hill, assistant vice president for public affairs at Wellesley.

 

Harvard University would have to pay more than $800 million on its $34.9 billion endowment fund.

 

Neither Bentley College nor Brandeis University have large enough endowments to trigger the tax, according to their media offices.

 

 

[mr_genius]

Oh i like this idea

 

it's funny how the ultra-liberal places whom claim that wealth redistribution and massive tax rates for everyone should they themselves be heavily taxes. typical though, when they need to pay, 'it's uncalled for' and 'unfair'. but they sure as hell want to spend everyone else money for them.

 

 

[EvilMonkey]

Oh i like this idea

 

it's funny how the ultra-liberal places whom claim that wealth redistribution and massive tax rates for everyone should they themselves be heavily taxes. typical though, when they need to pay, 'it's uncalled for' and 'unfair'. but they sure as hell want to spend everyone else money for them.

If they get away with this, will they stop at college endowments? What about groups like the Carnegoe Foundation or the Ford Foundation? I didn't see numbers for Carnegie, but Ford's endowment fund was at over $12 billion. That would be $ 120 million per year in 'taxes', just from them. Politicians of all stripes, once this door is open, would just wet themselves coming up with news social programs or tanks to spend this new money on.

[NorthSideSox72]

Terrible idea.

 

[Texsox]

The local Universities have to work within their local areas, there just is not excuse for it.

 

They take resources from the city, county, and state. Same reason I would consider changes in the tax laws concerning Churches. But at least with Churches, typically it is local tax payers supporting a local Church. With colleges, you have tax[ayers in other areas sending their students there, and they do go off campus and need services.

 

What they should do is cut taxes 50% and send rebate checks, then they wouldn't have these budget crisis.

[DrunkBomber]

This would open up such a can of worms it would be scary to see where it could lead.

[EvilMonkey]

The local Universities have to work within their local areas, there just is not excuse for it.

 

They take resources from the city, county, and state. Same reason I would consider changes in the tax laws concerning Churches. But at least with Churches, typically it is local tax payers supporting a local Church. With colleges, you have tax[ayers in other areas sending their students there, and they do go off campus and need services.

 

What they should do is cut taxes 50% and send rebate checks, then they wouldn't have these budget crisis.

Peterson, who serves on the Joint Higher Education Committee, said universities such as Harvard need to do more to be good neighbors, including possibly offering payments in lieu of taxes to the cities and towns that host them

So, the money the students spend in the community doesn't help at all? The increased value of housing due to the presence of the universtiy doesn't help at all? The local housing purchased by teachers doesn't help? Alumni returning for athletic events spending boatloads of money of food, booze, restaurants, lodging, etc don't help? While I think the scholls should use some of that money to maybe lower tuition a bit, a lot of it was given to the schools with stipulations that they be used in certain ways. But as I mentioned earlier, if you go for the schools, can the 'foundations' be next? By that logic, they should.

[Mplssoxfan]

Agree with NSS and Alpha.

 

Horrible, horrible idea.

[mr_genius]

If they get away with this, will they stop at college endowments? What about groups like the Carnegoe Foundation or the Ford Foundation? I didn't see numbers for Carnegie, but Ford's endowment fund was at over $12 billion. That would be $ 120 million per year in 'taxes', just from them. Politicians of all stripes, once this door is open, would just wet themselves coming up with news social programs or tanks to spend this new money on.

 

i only like the idea because it shows these liberal goofs how bad all their socialist and wealth redistribution schemes are. obviously i'm not for the government just grabbing loot out of peoples savings accounts.

 

 

[Texsox]

So, the money the students spend in the community doesn't help at all? The increased value of housing due to the presence of the universtiy doesn't help at all? The local housing purchased by teachers doesn't help? Alumni returning for athletic events spending boatloads of money of food, booze, restaurants, lodging, etc don't help? While I think the scholls should use some of that money to maybe lower tuition a bit, a lot of it was given to the schools with stipulations that they be used in certain ways. But as I mentioned earlier, if you go for the schools, can the 'foundations' be next? By that logic, they should.

Yes it helps, but perhaps they could pay all the costs, not just help?

[mr_genius]

Terrible idea.

 

why? take from the rich and give to the poor.

 

 

why do you want tax breaks for the wealthy, northsidesox72?

Edited May 4, 2008 by mr_genius

[Texsox]

i only like the idea because it shows these liberal goofs how bad all their socialist and wealth redistribution schemes are. obviously i'm not for the government just grabbing loot out of peoples savings accounts.

there's no excuse for universities not to work with communities," state Rep. George Peterson Jr., R-Grafton, said yesterday.

 

BTW, unless you want to live in a country that only the poorest among us can afford to pay for, we will always have the wealthier people, those with greater resources, paying more in taxes. So that redistribution comment, while a nice sound bite, doesn't work in reality.

[mr_genius]

BTW, unless you want to live in a country that only the poorest among us can afford to pay for, we will always have the wealthier people, those with greater resources, paying more in taxes. So that redistribution comment, while a nice sound bite, doesn't work in reality.

 

 

good, you finally agree with me that rich people are paying the most taxes.

 

and it is nice to see someone being consistent on something like this. you think a rich liberal institution should pay out loot. you think a rich conservative one should pay out loot.

 

 

Edited May 4, 2008 by mr_genius

[Texsox]

So, the money the students spend in the community doesn't help at all? The increased value of housing due to the presence of the universtiy doesn't help at all? The local housing purchased by teachers doesn't help? Alumni returning for athletic events spending boatloads of money of food, booze, restaurants, lodging, etc don't help? While I think the scholls should use some of that money to maybe lower tuition a bit, a lot of it was given to the schools with stipulations that they be used in certain ways. But as I mentioned earlier, if you go for the schools, can the 'foundations' be next? By that logic, they should.

 

Who should pay taxes?

 

Not a grocery store who helps the community by offering lower prices, and a closer to shop alternative. Not school teachers because they contribute to better schools and increase housing values. Not the local hotels because of the boatload of money the people who stay there spend on food, booze, etc. Not a local facory who employs people and increases the property values.

 

And maybe you would be excited to be paying higher property taxes for having a university nearby, others are not. The higher values are not always a blessing.

[Texsox]

good, you finally agree with me that rich people are paying the most taxes.

 

 

glad you finally saw the light.

 

I've always said that. It's the only way we can afford the roads, our military, our public education system, homeland security and everything else we have.

[EvilMonkey]

Who should pay taxes?

 

Not a grocery store who helps the community by offering lower prices, and a closer to shop alternative. Not school teachers because they contribute to better schools and increase housing values. Not the local hotels because of the boatload of money the people who stay there spend on food, booze, etc. Not a local facory who employs people and increases the property values.

 

And maybe you would be excited to be paying higher property taxes for having a university nearby, others are not. The higher values are not always a blessing.

I'm not quite sure I follow what you are saying in the first part. if you want to challenge their tax exempt status, then that would be a different argument. Not sure I would challenge you on that. But as long as they ARE tax exempt, their money is theirs, not a new piggy bank for the state. And come on, you know just how fast that money would disappear into all sorts of new programs and things no where even near taking care of the things people are complaining about. I am aware that there are some colleges that don't seem to do much for the community around them. And I know there are some that do a heck of a lot. I am saying that every person who works at that scholl and goes to that school pays taxes of some sort to the state, town, couinty, whatever, every time they buy something, use services or purchase homes in the area. Just because it isn't 'income' taxes doesn't mean they don't pay their share. How much city services do students living on campus really use anyway? And the teachers living in the area are paying taxes on everything they buy and use, just like you and me.

 

As for the higher property taxes, gentrification is a problem in many places, not just around universities. And I am sure those same people won't complain when they sell. And sort of like people moving next to the airport and complaining about noise, if you moved there, knowing that the college was there and what it entailed, then shut up and deal with it.

[NorthSideSox72]

why? take from the rich and give to the poor.

 

 

why do you want tax breaks for the wealthy, northsidesox72?

I can't tell if you are joking around about liberal tax policies, or saying I'm a tax liberal. I hope its not the latter, as I think I've been pretty clear on that. Not only don't I favor any increase in taxes, I have in fact gotten on Obama and others when they suggest it. The only tax "increases" I can ever remember saying I'd be OK with were:

 

1. Removing the SS income cap (because SS is a truly regressive tax)

2. Recognizing investment gains and arb profits taken in by traders doing local piggybacks to house business (as well as carried interest gains on personal monies) as income, which it truly is for them

 

Anyway, you probably meant the former. But I felt I needed to be clear.

 

[Texsox]

I'm not quite sure I follow what you are saying in the first part.

 

Come on, I slept since I wrote that.

 

I believe my point was, just because they "help" doesn't mean we should automatically give them a pass. For the most part, everyone "helps" in a community. When we start using that criteria, number of employees, service to the community, we become resource rich and cash poor. I firmly believe we should all pay a fair share, and we should have balanced budgets.

[southsider2k5]

This is literally putting a tax on education. Endowments help defray the costs of education. Even if we aren't talking about money for things like scholarhips and the like, endowments pay for things like new buildings, new programs, etc. Putting a tax on that, is literally putting a disincentive to people who want to aid others educations. This is one of the dumbest thing possible to tax. Can you imagine if someone said they wanted to put a tax on dorm fees, tuition, books, or something like that? This economically has the exact same effect.

[Balta1701]

This is literally putting a tax on education. Endowments help defray the costs of education. Even if we aren't talking about money for things like scholarhips and the like, endowments pay for things like new buildings, new programs, etc. Putting a tax on that, is literally putting a disincentive to people who want to aid others educations. This is one of the dumbest thing possible to tax. Can you imagine if someone said they wanted to put a tax on dorm fees, tuition, books, or something like that? This economically has the exact same effect.

Well, let me give the other side of this issue. There are right now a handful of schools, basically around 10 (including my own school) who's endowments have pretty much gone insane. And on top of it, the schools with the biggest endowments are actually having trouble finding stuff to spend the money on, so it basically is sitting around growing. With the rates of return that the top couple schools have on those investments, they've basically got very little reason to actually come up with things to spend the money on. A couple of these schools have come up with things like free tuition for a large chunk of their students as a way just to spend some of the money, and even then it's probably not enough.

The number of colleges and universities boasting endowments of $1 billion or more climbed by 14 last year to a record 76, nearly doubling the number of such schools five years ago. And as tuition increases continue to outpace inflation, that's prompting some critics to step up their pressure on colleges to share more of their wealth.

 

College endowments averaged a 17.2% rate of return last year over the previous year, and the billion-dollar-plus schools posted the best returns of all, says a report released today by the National Association of College and University Business Officers, a non-profit group, and TIAA-CREF, an asset management firm.

 

Harvard's nearly $6 billion increase last year alone is larger than the endowments of all but 14 of the 785 schools that participated in the study. And the combined value of the top 10 colleges represents 35% of the $411 billion in total endowment assets reported.

 

Yet the percentage of the endowment those schools spend each year — for everything from hiring faculties to building maintenance to competing for research — is among the lowest. Schools with $500 million or more in assets reported spending an average 4.4%, vs. an overall average payout last year of 4.6%.

For a smaller school, with a tiny endowment (hundred million dollars or so, give or take), putting a tax on that money would be murderous. For these biggest schools, putting a tax on that money is one potential way to force them to start spending that money rather than just hording it.

[southsider2k5]

Well, let me give the other side of this issue. There are right now a handful of schools, basically around 10 (including my own school) who's endowments have pretty much gone insane. And on top of it, the schools with the biggest endowments are actually having trouble finding stuff to spend the money on, so it basically is sitting around growing. With the rates of return that the top couple schools have on those investments, they've basically got very little reason to actually come up with things to spend the money on. A couple of these schools have come up with things like free tuition for a large chunk of their students as a way just to spend some of the money, and even then it's probably not enough.

For a smaller school, with a tiny endowment (hundred million dollars or so, give or take), putting a tax on that money would be murderous. For these biggest schools, putting a tax on that money is one potential way to force them to start spending that money rather than just hording it.

 

And the alternative minimum tax was originally created to tax less than 100 families. The Illinois toll road was supposed to become a freeway after the original bonds financing it were retired. The income tax itself was supposed to only tax the richest of the rich. Taxes do not go away, nor do they ever stay only taxing the people they are intended to tax at the time they are instituted.

 

Sorry, I don't buy it. History tells me different.

[Texsox]

And the alternative minimum tax was originally created to tax less than 100 families. The Illinois toll road was supposed to become a freeway after the original bonds financing it were retired. The income tax itself was supposed to only tax the richest of the rich. Taxes do not go away, nor do they ever stay only taxing the people they are intended to tax at the time they are instituted.

 

Sorry, I don't buy it. History tells me different.

 

 

That is the biggest glaring scare in all this. Even a good idea can grow into a problem. I see the danger if we begin chiseling away at the requirements. If, for example the law is written on endowments over $5,000,000,000, we may have only a handful today, but it will undoubtedly grow, or create a lot of endowments that plateau at $4,999,999,999. The chiseling would come in if they start reducing the endowment threshold or increasing the tax. Both are very real possibilities, as SS points out.

[Balta1701]

And the alternative minimum tax was originally created to tax less than 100 families. The Illinois toll road was supposed to become a freeway after the original bonds financing it were retired. The income tax itself was supposed to only tax the richest of the rich. Taxes do not go away, nor do they ever stay only taxing the people they are intended to tax at the time they are instituted.

 

Sorry, I don't buy it. History tells me different.

So then, what is the alternative? Is it simply to allow these endowments to continue growing and locking up funds (in no small part thanks to their tax-advantaged status as it is) that they never spend?

[Texsox]

So then, what is the alternative? Is it simply to allow these endowments to continue growing and locking up funds (in no small part thanks to their tax-advantaged status as it is) that they never spend?

Well the purpose of an endowment is to spend the interest not the principle. Trust me, my employer was hurting for funds and more than a few people wanted to "borrow" from the endowment instead of the bank. That was quickly shot down and fast.

 

Perhaps a tax on any retained interest income would be the sane thing to do. Encourage them to spend all of the interest each year, and offer some incentive to support local projects in the community that the local tax base otehrwise would have had to pay. I know my campus also patrols the neighborhoods around the campus. Parking violations are the #1 priority to keep the neighbors happy, but they do have the authority to arrest, write traffic tickets, etc.

[southsider2k5]

So then, what is the alternative? Is it simply to allow these endowments to continue growing and locking up funds (in no small part thanks to their tax-advantaged status as it is) that they never spend?

 

Why does something have to be done about it? Who is it hurting? The only people I see it "hurting" are the people donating money to these institutions, and if they are still giving them money, I don't really feel sorry for them. I just don't see an education tax as a pressing need with all of the other things going on right now, especially when there is the chance, no correct that, the probablity, that it will spiral out of control and end up hurting a whole group of people that this was never intended to affect in the first place.