An Argument for the Repeal of Tax Preferences for Educational Endowments

23 Pages Posted: 9 Jan 2010 Last revised: 14 Dec 2012

See all articles by Herwig J. Schlunk

Herwig J. Schlunk

Vanderbilt University - Law School

Date Written: January 8, 2010

Abstract

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

Keywords: tax-exempt organizations, education, endowments, charitable deduction

Suggested Citation

Schlunk, Herwig, An Argument for the Repeal of Tax Preferences for Educational Endowments (January 8, 2010). Vanderbilt Law and Economics Research Paper No. 09-37, Available at SSRN: https://ssrn.com/abstract=1533542 or http://dx.doi.org/10.2139/ssrn.1533542

Herwig Schlunk (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
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