An Argument for the Repeal of Tax Preferences for Educational Endowments
This essay examines the case for granting tax preferences to private university endowments. It looks first at the theoretical arguments that can be made to justify using tax preferences to enlist the help of private individuals in the pursuit of public goals, and finds that such arguments do not apply in the case of tax preferences for endowments. It then looks at the actual performance of private university endowments, asking whether their existence or their rapid growth has led to the provision of more higher education, or cheaper higher education, or better higher education. The unfortunate answer is “No.” In light of the foregoing, the essay recommends the repeal of tax preferences for private university endowments