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After reading the article, I guess I don't really have an opinion on the tax.. but is it really reasonable to tax endowments over $1B, if the school has $4.2B i
by rgbrenner 12y ago
After reading the article, I guess I don't really have an opinion on the tax.. but is it really reasonable to tax endowments over $1B, if the school has $4.2B in operating expenses? Seems like they should be able to keep a larger buffer than 3 months.
If the problem is "hoarding," then why have a fixed amount at all. Why not 1 year of operating expenses? That would encourage all educational institutions to spend more every year on ongoing expenses (like research).
- 0xffff2 12y agoAgree in principle, but 1 year seems low. Isn't the purpose of an endowment primarily to generate ongoing income? I think somewhere in the neighbor hood of 20 years worth of expenses would be more reasonable. (Assuming a conservative 5% return on investment, the endowment would not be taxed on capital required to generate 1 year of operating expenses in income each year.) Alternatively, perhaps a tax could be levied only on any income to the endowment beyond 1 year's worth of operating expenses.