The Corner

Education

Will the GOP’s Tax Changes Destroy Higher Education?

Once the House Republican tax bill was unveiled, the usual voices on the left started screaming that if enacted, the changes regarding higher education would be devastating. It’s been the Chicken Little story.

I don’t think the sky will fall if the changes were to be put into law, but I don’t like all of them. In this Martin Center article, I explain why I like the changes that remove tax preferences for various higher-education activities (they make higher ed seem artificially less expensive than it is, contributing to our bloated and inefficient system), but don’t like the new taxes included in the bill.

Particularly controversial is the proposed tax on endowment earnings for big universities. This is catnip for conservatives who dislike Harvard and other elite schools, but skimming off a small amount of their endowment income (1.4 percent in the bill) would make almost no difference in their conduct and siphon money into the maw of the federal government, where our politicians will use it in equally if not more foolish ways. I think it would be a bad move, opening the door to higher rates and more mischief in the future.

George Leef — George Leef is the director of research for the John William Pope Center for Higher Education Policy.

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