A proposal by the editorial board of the New York Times:
Amherst, Harvard, Princeton, Williams, Yale and other top-tier colleges have per student endowments that approach (and in some cases exceed) $1 million. Because they are accredited educational institutions, the gains on their investments go untaxed, adding billions to their coffers each year.
It’s certainly true that these academic institutions have worked hard to be excellent. They deserve to be rich. They should be congratulated.
But should they be allowed to be so protected by the tax code that they can use their disproportionate wealth to raid poorer colleges and scoop up the best teachers by offering better pay, benefits and tenure-track positions? Should they further separate themselves from less fortunate colleges by taking the best high school students and offering them ever richer deals? (This month, for instance, Harvard announced that it would increase the financial aid it offers to middle-class and upper-middle-class students. Other schools are expected to follow suit.)
What to do? Well, here’s one solution: tax the investment income of the wealthiest colleges (though not their endowments). If the endowments of all academic institutions were evaluated on a per student basis, a standard could be set that could begin to allow revenue sharing.