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Digital Subscriptions > Newsweek International > 19th May 2017 > IVORY TAX HAVENS

IVORY TAX HAVENS

How the richest U.S. colleges get richer

DURING HIS successful quest to win Pennsylvania’s 20 electoral votes, Donald Trump told the state’s voters that colleges are fleecing taxpayers and enriching Wall Street.

“What a lot of people don’t know is that universities get massive tax breaks for their massive endowments,” he told a crowd in suburban Philadelphia. “These huge multibillion-dollar endowments are tax-free, but too many of these universities don’t use the money to help with tuition and student debt. Instead, these universities use the money to pay their administrators, or put donors’ names on buildings, or just store the money away. In fact, many universities spend more on private equity fund managers than tuition programs.”

Trump promised to make universities’ tax breaks contingent on schools’ willingness to reduce tuition prices—and lawmakers are now considering bills to do just that. New data released in April could fuel those legislative initiatives. According to a study by Stanford University scholar Charlie Eaton, universities are using their endowments to haul in more than $19 billion in tax subsidies every year. The analysis, which compiled data from 1976 to 2012, found that as the tax expenditures have flowed to college endowments, those endowments have exponentially grown—and have funneled billions to Wall Street money managers who make big fees off the pools of cash.

Despite the tax breaks and the flood of cash to Wall Street, many of the universities that benefit from the subsidies have refused to use their additional endowment resources to expand enrollment, admit more low-income students or lower their tuition rates.

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MACRON STRONGER THAN LE PEN, BUT FRANCE’S WORRIES FAR FROM OVE It was the day the world didn’t end, the day that the tide of populism that gave the world Brexit and Donald Trump turned, the moment when French voters chose pragmatism over protest. That, at least, was the judgment of Europe’s establishment at the victory of centrist Emmanuel Macron in the May 7th French presidential election. It’s not hard to see why the defeat of the Euroskeptic, anti-immigration Marine Le Pen was so vital to the West’s future. A victory for Le Pen’s far-right National Front party would likely have heralded the disintegration of the European Union and the end of the continent’s grand experiment with open borders. However, with Macron's victory, establishment Europe shouldn’t feel too relieved about right-winger Marine Le Pen’s defeat in France.
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