"Tax universities? The unthinkable is now a live possibility. Congressional plans to tax the endowments of wealthy private schools and the tuition benefits of graduate students have elicited outrage from universities and schadenfreude from Trump supporters. Missing in this outcry — and in the pending tax legislation — is a recognition of the long history of reciprocity between academia and government that has incalculably benefited society," Emily Levine and Mitchell Stevens write in an opinion article for The New York Times.
"The nation’s founders nourished great aspirations for higher learning and pined for a research university in the European mold rather than the British. John Adams and Thomas Jefferson were so desperate to do this that they considered transplanting Switzerland’s Genevan Academy wholesale to the nascent United States.
The economic and military demands of the Civil War finally presented the conditions for us to establish versions of a European-style university in America. To fund them, the government offered a quid pro quo in which universities were granted federal money and exemption from direct oversight in exchange for providing a service to society. The Morrill Act of 1862 charged the so-called land-grant universities to 'promote the liberal and practical education of the industrial classes.'
The nationwide introduction of tax exemption for both private and public universities in the early-20th-century tax code formalized this reciprocity. The sad irony is that while political leaders fought hard for universities years ago, their latter-day counterparts now seek to dismantle them.
We need to start asking which public goods universities are producing and whether government support gets Americans more of them. Taxing graduate students is a crude, destructive mechanism for extracting goods from academia because it would diminish both scientific discovery and the size and scope of the educated public that has been improving our country for generations. The current plan for taxing endowments does not address the problems that rightly drive citizen fury: soaring costs, educational inequality and schools’ resistance to change."
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Publication Date: 12/4/2017