In 2016, the 50 richest universities in America owned $331 billion in endowment wealth, a figure roughly three times the size of California’s entire state budget last year — and ten times the estimated net worth of President Donald Trump. Seventy-five percent of that wealth was held by less by four percent of schools, including such elite institutions as Harvard University, whose endowment was $34.5 billion in 2016), Stanford ($22.4 billion), Princeton ($22.2 billion) and Yale ($25.4 billion).
These outsized sums made college endowments a ripe target in the House GOP’s tax plan, which proposes a 1.4 percent excise tax on the nation’s largest endowments. Though only about 70 schools would be subject to the levy as currently contemplated, it would raise an estimated $3 billion over 10 years.
As a piggy bank for financing lower personal and corporate tax rates, an endowment tax is a terrible idea, and colleges are right to protest. But as a mechanism for correcting some of the current inequities in higher education, endowment reform is well worth pursuing.
