Tax Harvard to Help Fund Poorer Colleges

Banker urges taxing investment earnings to close education gap
By Nick McMaster,  Newser Staff
Posted Dec 21, 2007 4:17 PM CST
Tourists look at the John Harvard statue at Harvard University December 19, 2000 at the main campus in Cambridge, MA.    (Getty Images)
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(Newser) – The growing disparity between the richest universities and their more modest counterparts is not as often discussed as other aspects of America's wealth gap, prominent investment banker Herbert Allen writes in the New York Times—but it should be. The nation’s wealthiest colleges have endowments topping $1 million per student—thousands of times greater than those of the poorest.

With richer schools attracting the best faculty and students, Allen recommends an equalizer: Tax investment income (not endowments) of the richest schools and redistribute to the poorest. Schools like Harvard can afford it—it made $7 billion in capital gains last year alone—and should see it as a “down payment on their professed mission:” to create a better society.