By Richard Vedder
My new friend and associate Wick Sloane is, with the help of Whiz Kid Jonathan Leirer, doing a great study for CCAP which will be released in the near future. In a draft written a few days ago, he noted that the tax advantages donors to Columbia University receive if it succeeds in its new $4 billion fundraising campaign would fund well over 200,000 Pell Grants.
Yet Stanford has now topped Columbia, announcing a $4.3 billion capital campaign. Suppose both campaigns are successful. Wealthy taxpayers will take over $8 billion in deductions against their gross incomes on their federal income tax forms, which should minimally lower their tax liability by $2 billion. That $2 billion could fund 500,000 Pell Grants at $4,000 apiece (far greater than the average Pell Grant today).
Lay those half-million students end-to-end, they would stretch from Washington, D.C. to nearly Indianapolis. Our tax system rewards the bastions of the elite at the expense of educating the poor.
We are giving huge tax subsidies to wealthy persons who want to make wealthy universities richer, and widen the gap between the haves and have nots in American universities. Should we be giving tax deductions to schools whose annual endowment income is, say $30,000 per student or more? How does this promote higher education access or affordability? What national purpose does it serve? Why should a dollar's gift to Harvard, with $1.6 million in endowment for every student, be encouraged as much by public subsidy as a dollar's gift to my university, with perhaps $10,000 in endowment per student? Or community colleges that have virtually no endowment?
Wick's forthcoming study promises to be provocative and more than a bit infuriating to some in the Higher Education Establishment. So be it. It needs to be said.