THE NEW YORK TIMES – CHARLIE EATON/PHOTO CREDIT: WIKIMEDIA COMMONS
Last week, Republicans in Congress proposed a tax on wealthy private-college endowments as part of their make-or-break tax bill. The new tax, if passed, would bring in an estimated $3 billion from 2018 to 2027.
University leaders were shocked. Had Republicans in Washington forgotten their own Ivy League roots? Or was the proposal just for show — red meat for a conservative base that resents cultural liberalism in academia? It seems improbable, after all, that the narrowly divided Senate would actually pass a tax on endowments.
But it would be a mistake to dismiss this move as just partisan pandering. Democrats have also proposed state-level endowment taxes in Connecticut and Massachusetts, homes to some of the nation’s wealthiest schools.
It’s an increasingly bipartisan view that elite private colleges are islands of wealth. And there’s good reason for that: It’s true.
An investigative report this week by The New York Times, based on a leak of offshore financial records known as the Paradise Papers, revealed that dozens of wealthy college endowments use Caribbean islands as offshore tax havens for their investments.