19.11.17

RENT-SEEKERS GOTTA RENT-SEEK.

In Boston, the economic interests of local industry have to be protected.  And Boston likes to think of itself as the country's largest college town.  I think Chicago could give them a run for that, with DePaul, Loyola, and Illinois-Chicago each admitting more students than Harvard or those hockey schools across the Charles turn down in a year, but you don't get the kind of special pleading out of higher education in Chicago, where there are plenty of other special-pleaders ahead in the queue.  Here's how the house organ for deep-blue smug by the deep-blue sea characterizes the planned tax treatment of higher education.  "The proposed new tax on endowments at Harvard and Yale won’t generate much money, but it does play the signature trick of Trump-style Republicanism: It sets up a symbolic confrontation with the elite, even as it systematically enriches the wealthiest."  There are other parts of that tax bill that come off as strange, including the treatment of tuition waivers as an imputed income.  That's wonky.  A quarter-century ago, Clinton era rewrites of the tax code sought to tax the imputed rent on owner-occupied houses as a form of income.  Both the tuition waivers and the imputed rent qualify as income under the Haig-Simon definitions, and both are very hard to identify in practice.

But what's funnier is the way the people of the high tax states change their tune when it's their tax breaks at risk.  From that same editorial, read and enjoy this.
The Senate bill, which at least preserves existing tax breaks for student loans, would eliminate the deduction for state and local taxes. Instead of college kids, Senate Republicans are thumbing their nose at blue states that pay for education and infrastructure out of their own funds. (Not coincidentally, states like Massachusetts, California, and Connecticut already contribute far more to federal coffers than they get back, because they’re more productive than states that refuse to invest in themselves.)
But asking the "more productive" states to pay more in federal taxes, which is what eliminating those property and income or sales tax deductions will do is a bit much.  Thus do people with lower incomes, living in less-heavily-taxed states, contribute to those investments Massachusetts, California, and Connecticut are making, or not, with Connecticut trying to become the next Illinois even now.

Then there's some reporting on the deleterious effect ending the tax-exempt status of those collegiate endowments on the local economy.
“These schools use endowments to build buildings, which employ our workers, and use it to subsidize student financial aid,” said Representative Michael Capuano, whose Cambridge district includes Harvard.

“If Harvard has a smaller endowment, they are less likely to build a building. And that hurts my construction industry, that hurts my financial services industry,” Capuano said.
What, taxing wealth less aggressively trickles down?  Apparently that's not a discredited idea when it's tax benefits for Democratic hedge funds.  But if you're a railroad or a printing company, you don't count.

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