Endowment income tax exemption lets wealthy colleges compound untaxed savings

Evidence

Private nonprofit colleges and universities—which include every school in the Ivy League, along with others such as Stanford, Northwestern, Duke, and Emory—don’t pay taxes on their endowment income. If you or I have a savings or investment account that increases every year, we have to report the interest income and pay taxes on it, but nonprofit colleges and universities don’t. Put another way: By saving enough money to cover costs with plenty left over, thanks in part to the income and property tax exemptions, the wealthiest nonprofit colleges and universities avoid paying taxes on that excess, enabling them to save even more. — Dorothy A. Brown, The Whiteness of Wealth, 267

Categorization

• DEFINE: Establishes the endowment-income exemption mechanism the reader needs to name precisely as one of the race-neutral provisions.