November 12, 2012


Maybe 15 Years ago a columnist at the Atlantic noted that the not-for- profit sector was placing itself in the same position the Catholic monasteries in England were in at the start of Henry VIII’s reign. The monasteries held all the wealth and the Henry’s government needed revenue.

A one time excise tax on the fair market value of the endowments of all the private foundations would work nicely. An to be fair, the rate should be low for the small guys and 90% for the behemoths like Ford and Carnegie.

Colleges are a bit trickier. Some of them have much larger endowments than others. Maybe it should be a graduated rate based on a multiple of an amount based on the theoretical current income to the school if all students enrolled at the beginning of the school year paid full tuition and fees. If the FMV of the endowment is less than eight to ten times that number the tax would be nominal. The rate for a school like Harvard where the income alone from the endowment could pay the combined tuition and fees with lots of money left over should be 90%. After that haircut place the schools on a system that confiscates part of their endowment if future tuition increases ever exceed the CPI.

People are really getting creative out there. Speaker Boehner, take note. A bit overdone in this formulation, perhaps, but . . .

UPDATE: Taxing Big Blue. “The point is that anyone can tear pages out of Barack Obama’s beloved Alinsky playbook. He can be forced to live up to his own standards. His ideology can be bent into shapes that will enrage his loyal constituents. The President says he wants a ‘balanced approach?’ Let’s jump on the see-saw with gusto, and give him one hell of a ride.”

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