The Right Way to Fix Universities

from NYTs

Tax universities? The unthinkable is now a live possibility. Congressional plans to tax the endowments of wealthy private schools and the tuition benefits of graduate students have elicited outrage from universities and schadenfreude from Trump supporters. Missing in this outcry — and in the pending tax legislation — is a recognition of the long history of reciprocity between academia and government that has incalculably benefited society.

The nation’s founders nourished great aspirations for higher learning and pined for a research university in the European mold rather than the British. John Adams and Thomas Jefferson were so desperate to do this that they considered transplanting Switzerland’s Genevan Academy wholesale to the nascent United States.

The economic and military demands of the Civil War finally presented the conditions for us to establish versions of a European-style university in America. To fund them, the government offered a quid pro quo in which universities were granted federal money and exemption from direct oversight in exchange for providing a service to society. The Morrill Act of 1862 charged the so-called land-grant universities to “promote the liberal and practical education of the industrial classes.”

The nationwide introduction of tax exemption for both private and public universities in the early-20th-century tax code formalized this reciprocity. The sad irony is that while political leaders fought hard for universities years ago, their latter-day counterparts now seek to dismantle them.

The deal between universities and government now on the table was negotiated in the years after World War II, when American pride in military victory commingled with anxiety over how to manage the stateside return of millions of soldiers. The result was the Servicemen’s Readjustment Act of 1944, popularly known as the G.I. Bill, which would eventually send more than two million veterans to college and remake the American class structure. In a single generation, college access was transformed from an option only for the affluent and a minority of industrious students into a broadly accessible avenue of social mobility.

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One Comment

  1. As education is the framework for a stronger and promised tomorrow, we also have to take a step back and look at the education industry that the United States has. When you take a look at the income in tuition alone that students pay on an annual basis, the numbers are quite mind-blowing. Whenever you see numbers that are in the hundreds of millions into the tens of billions of dollars, you can guarantee that Congress is wondering how they can tax it. In theory, this idea of taxing educational institutions makes sense – it would be very profitable. However, ethically it is a terrible idea. Students that are paying their way through college are already paying astronomical tuition rates as it is, taking out loans that they are still not sure how they are going to pay back in a timely fashion, and agreeing to interest rates that are disgustingly high because they have no other choice when it comes to seeking a higher education. In today’s society, we are quickly watching the Associate’s Degree become the new high school diploma, the Bachelor’s Degree the new Associate’s Degree, and so on. This means that receiving a college education is even more imperative today than it was for previous generations. In most states, there is not a living minimum wage so uneducated workers are struggling as it is and in many cases end up having to seek out higher education. Taxing universities and colleges will only make these costs rise. Students will be forced to take out even higher loans than they ever have before, and those who are on the fence about applying to college due to the cost will probably not even enroll. I believe that if we start to tax universities and colleges, we will see a spike in the number of uneducated workers in our society and a rise in the number of people living in poverty within the United States.

    In addition, taxing universities will infringe on the accomplishments and situations of students that are entitled to/require financial assistance to attend college. Sports scholarships, grants, and academic financial awards/scholarships would now be taxed per each individual student, taking away from their financial assistance – leading to even more loans. This will not only require students to take out more debt, but also it will demotivate them to receive a higher education. I say this because I believe that at least some students will not feel fully supported by their university and their government, and will lack the fundamental understanding of the value of higher education if a substantial amount of their AWARD is being taken out for tax purposes. If the government needs more money, I suggest taxing other entities – like churches (but that is another hot button issue that I won’t discuss here) or industries like the medicinal/recreational marijuana industry. If the United States restricted the federal ban on marijuana use/possession and allowed states to set up individualized, taxed marijuana dispensaries, there will be a TON of additional tax revenue brought in annually (just look at how well Colorado is doing). Overall, taxing universities is infringing on the opportunities that our students are given, and since that the students in college of today are the future of tomorrow, I strongly suggest that the US government does not tax educational institutions because we need as many educated workers as we can in order to maintain being a global powerhouse economically since unskilled labor is not the United States’ speciality. This article was definitely a compelling read, and as a college student myself, I know that if my scholarships were to be taxed, I would not feel confident enough in my education to get a job that would be able to support the amount of loans that I will have to pay off in just a few years, considering I chose to attend a private university will annual tuition costs just under $50,000.

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