www.taemag.com/issues/articleID.18722/article_detail.asp
The faculties of Harvard and the University of California at Berke ley were large contributors to John Kerrys Presidential campaign. The Be rkeley faculty gave six times as much to Howard Dean as to George W Bus h Campus liberalism is particularly pronounced at the most elite and we althy institutions. A core value of American liberals is the importance of redistributing wea lth from the prosperous to others, through highly progressive taxes and transfer payments. Which leads to a question: If redistributing wealth i s a good idea for workers, companies, individuals, and families, then in tellectual consistency suggests it should be equally valid for instituti ons like colleges and universities. Why should students at Princeton, where economist Paul Krugman teaches wh en he is not thundering against the well off on the New York Times edito rial page, enjoy income from huge endowments, while students at poorer i nstitutions have far fewer educational resources? Worse, the extreme inequality of colleges is subsidized by the government . Gifts to rich schools are tax deductible for the donors. Universities and colleges pay no taxes on their capital gains, dividend, and interest income. That is a ratio of 27:1about the same difference in inc ome between a successful investment banker and a Wal-Mart clerk. The numbers are even more striking in small liberal arts colleges. Annual earnings of just 4 percent would produc e more than $46,000 per student in yearly interest. Bates College had only $106,000 in endowment per student, less than one t enth of Grinnells. Liberal professors at Harvard, Pr inceton, Amherst, and Williams should follow the principles they proclai m and strongly support action to end campus disparities by redistributin g educational wealth. Congress should pass, and President Bush should sign, a hefty and progres sive tax on large per student endowments. If redistribution is good, the same concept should ap ply within universities. Why should the law schools at George Washington and Georgetown live in splendor just because their alumni make more mon ey than theology or economics or anthropology majors? The wealth of thes e law schools should be transferred to poorer departments. Professors at rich schools will splutter that such taxes will sharply red uce incentives for alumni to make gifts. Are we to believe that graduate s of Yale are so narrow-minded and selfish that they only want to help Y alies? Surely Yale, Princeton, Williams, and Grinnell alums will give ju st as freely knowing that their gifts are helping students at poorer sch ools, particularly since they were taught primarily by liberal professor s devoted to income redistribution. Administrators at rich colleges will claim they raised their money throug h great effort, that it is unfair to take it away, and that this transfe r would eliminate the incentive for poor schools to do a better job of f undraising. We wont take those arguments any more seriously than liberal s take the similar arguments conservatives make about income taxes and d eath taxes. So when members of the classes of 1956 and 1981 gather next June at their 25th and 50th reunions in the tony precincts of New Haven, Cambridge, P rinceton, and Williamstown, they should expect to see 35 to 40 percent o f their gifts whisked away to poorer schools. In fact, they should increase the size of their gift s to make up for the tax. is a professor of economics at George Washington Univ ersity.
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