Tuesday, November 07, 2017

$300 million per year

That is how much will be raised by the scant 1.4% tax on the net investment income of private university endowments.  So if it were 14%, as it should be, it would raise $3 billion per year.  Real money.

However, this estimate is probably high, for two reasons.  First, the tax has already been watered down--initially, it applied to endowments of $100,000 per student and more, but now it applies only to endowments of $250,000 and up.  So Harvard and Yale still pay, but many schools have been let off the hook.

More important, what is "net investment income"?  It's not the same as total return.  I'm sure the endowments will adjust their investment strategies for maximum tax avoidance.

1 comment:

JLM said...

The 1.4% tax is silly, and a 14% tax seems harsh. (If the government is collecting that much money from private universities, shouldn't it be spending more on public education?) I'd like the endowment tax better if funds collected from Yale and Dartmouth were immediately distributed to UConn and UNH.