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The tax on university endowments is anti-intellectualism and cultural resentment masquerading as fiscal policy

Summary:
Paying tax is a burden: the forced transfer of spending power from the private sector to the state.Fear of the law is probably the most important reason people tolerate this burden. But there is also a belief, perhaps misguided, that the tax burden is relatively “fair”. The tax system can command popular legitimacy as long as it doesn’t appear to discriminate and at least looks as if it operates according to straightforward principles. We are about to see what happens when these pretences are abandoned.One small feature of America’s tax changes passed at the end of last year was explicitly designed to punish institutions of higher learning. Universities, which are otherwise exempt from paying tax because they are non-profits, will now have to pay 1.4 per cent of their endowment income to

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Paying tax is a burden: the forced transfer of spending power from the private sector to the...

Matthew C Klein
I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist. I have worked at the world’s largest hedge fund and read every FOMC transcript since May, 1987

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