Thursday, November 18, 2021
Edward A. Zelinsky (Cardozo), Expand the Taxation of Educational and Other Charitable Endowments, 173 Tax Notes Fed. 799 (Nov. 8, 2021):
In this article, Zelinsky argues that section 4968, which imposes an annual tax on the investment income of some college and university endowments, should remain in the tax code as a revenue measure and a harbinger of a world in which all charitable endowments pay annual tax on their investment incomes.
However well-meaning the advocates of the BBBA’s section 137702 may be, they have picked the wrong vehicle for regulating college and university scholarship practices. Section 4968 should remain intact as the initial extension beyond private foundations of the revenue taxation imposed by section 4940. Section 4968 should not be converted into a regulatory measure. Section 4968 and its revenue-raising tax should instead be extended to all educational endowments and, eventually, all charitable endowments.