The tax bills would impose a new 1.4 percent tax on the investment income of endowments of very wealthy colleges and universities. They would eliminate deductions for student loans and tax tuition waivers for graduate students.Don't say I didn't warn you.
These institutions have been coasting on their reputation for excellence and as havens of free thought, even as they impose speech codes, conduct kangaroo courts on sexual assault charges and allow humanities and social science departments to be dominated by postmodern agitprop and gibberish.
Student loans impoverish many students, especially dropouts, while the money they pump into universities produces administrative bloat, to the point that there are more administrators than teachers in higher education today. Government subsidies produce an oversupply of people with doctorates, causing their theses to go unread and their job prospects to be dismal.
Polls show that many voters have become aware of the intolerance and unaccountability of these institutions and that the economic rewards of a degree are diminishing. The tax bills send a signal to the people running higher education that they'd better change their ways.
It gets better. Apparently "make high earners pay their fair share of taxes" doesn't mean "stop letting high earners write off their state and local taxes."
Or consider the yelps about the Republicans' planned repeal of the deductibility of state and local taxes (except for some property taxes). This would be progressive in its incidence because most of the increased federal revenue would come from high earners in high-tax states, especially New York, New Jersey, Connecticut and California, whose residents tend to vote Democratic.Maybe. The problem, at least as I see it from Illinois, is that the productive people are moving out, leaving only the beneficiaries of the government generosity to keep voting themselves that generosity. There's nothing new here: maybe, finally, there is a government in Washington that sees what is going on and considers doing something else.
Americans in lower-tax states have been effectively subsidizing bloated public payrolls and astonishingly generous pension plans. Removing the deduction would put pressure on politicians in high-tax states and on the public employee unions to hold taxes and spending down.
Heather Wilhelm is more to the point.
Why should Americans who don’t live in New York have to cushion the state’s unwieldy, ossified tax-and-spend regime? True tax pillaging, after all, starts at home.So mote it be.
It’s not news to point out that people are fleeing blue states for red states. Recent reports show that Texas gained 1.3 million new residents over the past ten years. (Texas, of course, has no state income tax.) During the same time period, Illinois and New York lost more than 2 million. The GOP tax bill, which rips the mask off of high state-tax regimes, could very well increase the bleeding. “High-income earners on the East Coast understand the implications of this,” a friend who works in finance told me this week. Some of his contacts on Wall Street, he added, are toying with the idea of voting with their feet.
If blue states can’t get their act together soon, perhaps that’s not such a shabby idea. It would certainly send a message, loud and clear: “It’s not the tax bill that’s the problem, dear high-tax state governments. It’s you.”