by Mitch Kokai
Senior Political Analyst, John Locke Foundation
George Leef’s latest Martin Center column focuses on the Republican tax plan’s potential implications for colleges and universities.
On November 2, House Republican leaders unveiled their tax reform plan. A number of its provisions affect higher education. While this is only a proposal, it’s worth looking into those provisions. Several of them eliminate tax preferences for college-related activities and two impose new taxes.
Those that take away tax preferences are beneficial, but the new taxes are not. I say that because tax preferences of all kinds distort people’s decisions, pushing them to do things they might not otherwise do by making them less costly. The government shouldn’t do that. As for the new taxes, they would raise relatively small amounts of money but harmfully interfere with university operations. …
… To sum up, the tax code ought to be as neutral as possible, which is to say that it doesn’t alter people’s rational behavior. For that reason, the proposed elimination of various tax preferences is good. On the other hand, the clumsy tax on top-earning college personnel and the tax on endowment earnings are bad ideas that should be opposed.