Assaulting the Golden Goose

Photo: Jacquelyn Martin, AP

Hunt Lawrence and Daniel J. Flynn, writing in The American Spectator make some interesting points on how they think Big Business gaming the Tax Code parallels Hollywood stars bribing their kids into elite colleges. Let’s take a look.

In the wake of Lori Loughlin, Felicity Huffman, and other parents allegedly using the foul means of their considerable means to gain admittance for their children to elite schools, Senator Ron Wyden (D-OR) wants to end deductions for parents who donate to schools their children attend. Wyden cites deductions for the naming of campus buildings and scholarships, and for sports tickets, as of particular concern.

This is, apparently, not Ted Kennedy’s Democratic Party.

“[H]eadlines about the wealthiest Americans buying access to our elite colleges and universities is just a new version of an old story,” he explained after the scandal broke. “While the prosecutor attempted to distinguish these crimes from payoffs in the form of buildings or stadiums to secure access for the undeserving, it is all part of the same corrupt system.”

Is it? I’m not sure. Bribing your kids into a school is certainly wrong, no question at all, and it hurts the kids that might otherwise have been admitted, they are the victim here.

But giving scholarships and or donating building is quite a lot different, I think. Yes, a few kids might not be admitted for a (possibly) unqualified offspring of the donor to be. But data suggests that legacy admittees are well above average, so it is questionable.

What is not questionable is that the building or the scholarship, or for that matter the golf course, will benefit many other students and the local population than the donor’s descendants. I don’t think it is the same thing at all. It is an (at least) quasi-public benefit.

Remember my Alma Mater, Purdue got its starts because John Purdue a wealthy local businessman contributed $150,000 plus a hundred acres of land to another $400,000 in contributions. That gave Purdue a good start to becoming an exceptional University and greatly benefitted the Lafayette area as well. Not the same at all as buying admittance for your kid, is it? But yes, he got his name on the whole joint. Most universities have similar stories.

The authors go on to compare this with Amazon paying not taxes again this year.

Amazon, certainly as famous as Lori Loughlin, manipulated the tax code in such a way as to pay zero in corporate income taxes for the last two years.

“Amazon, the ubiquitous purveyor of two-day delivery of just about everything, nearly doubled its profits to $11.2 billion in 2018 from $5.6 billion the previous year and, once again, didn’t pay a single cent of federal income taxes,” the Institute on Taxation and Economic Policy points out. The online behemoth, in fact, reported a tax rebate of $129 million for 2018. Just as YouTube celebrity Olivia Jade took a deserving kid’s spot at USC, Amazon took a tax rebate better used to fix a road, pay a soldier, or reduce the debt.

Amazon, like parents who time donations to colleges in anticipation of a child seeking admittance, does not break the law. But to most it seems like they take advantage of the existing law, which begs for reform.

Amazon, like Laughlin and Huffman, did not alone transgress decency here. They merely acted as the most famous of those who did. They used shortcuts. But they did not create these shortcuts.

In the case of Amazon, the same government deprived of revenue created the shortcuts. And despite political rhetoric decrying the Trump cut of the corporate rate, the rates do not represent the problem. The labyrinthian loopholes do.

This is simply poppycock. The politics of raw envy in action. Nobody is insinuating that Amazon even lobbied for these loopholes. They exist. I’m no great fan of Bezos but, there is no shame in paying the lowest tax that one can legally. In fact, it is immoral for a company to deprive its shareholders, whether one or millions of them, of the profits of the company, derived legally. Judge Learned Hand* said it best:

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. public duty to pay more than the law demands.

The only time that would change is if Amazon (or its stockholders) bribed Congress or the President, or for that matter the IRS to put in the loopholes. That many of them are unfair is pretty much a given, but they exist, and they exist for all taxpayers that they apply to equally.

Would a very low flat tax without deductions and only on individuals be more fair? Yes, Yes, it would. But to essentially accuse Amazon of tax evasion for doing what is not only legal but their fiduciary duty is well beyond the pale.

*Judge Hand was, in fact, a Progressive, although also believed in judicial restraint to a point, although he did indulge in legislating from the bench. What many conservatives today would call a “Hack-in-Black”.

Ripples in the Bricks

The title refers to a column in the Purdue Exponent when I was there, and indeed we are going to talk about Purdue today. It’s also mostly a good news post, because we are overdue for one, in my opinion.

Kate Hardiman wrote last December in The Washington Examiner about why enrollment is soaring at Purdue.

New numbers from the National Student Clearinghouse Research Center show that university enrollment has continued to decline for the sixth straight year. Community colleges and for-profit institutions have taken the biggest hit, losing 97,000 students and 69,000 students (on average) respectively. […]

Former Indiana Gov. Mitch Daniels has pledged that his tenure at Purdue University will bring new efficiency to the stultifying higher education sector — he has frozen tuition through 2019 (one of the only schools in the nation to do so), and has created a new plan to help students earn a bachelor’s degree in three years. Daniels is also tapping into the burgeoning online education sector through a partnership with Kaplan.

Since his tenure began in 2013, Purdue’s undergraduate applications, enrollment, alumni donations, graduation rates, and the number of startups launched by researchers have hit record levels. Daniels recognizes the need to innovate and it’s paying off.

Purdue was the first public University to subscribe to that fantastic letter published by the University of Chicago, but it has gone farther. Alex Morey writing for The Foundation for Individual Rights in Education (FIRE) tells us about that.

Purdue University has been making good on its promises to promote free speech on campus. In May of last year, it became the first public institution to formally commit to upholding free expression by adopting the FIRE-endorsed Chicago Statement, and it eliminated all of its speech-restrictive policies to become one of FIRE’s distinguished “green light” schools. Many universities might have declared a job well done and moved on.

Not Purdue.

Steven Schultz, Purdue’s chief legal counsel, said those sweeping changes instead marked the beginning of a larger, ongoing conversation about the role of free speech at the public university, which serves nearly 40,000 students. More specifically, the developments prompted Schultz, along with small groups of interested faculty and students, to begin discussing how Purdue could create a culture where free expression is truly understood and appreciated in light of these new commitments.

“A consensus started to emerge about the need for a training session and the value it would have,” Schultz said.

And they reached a decision: Free speech would play a starring role in student life from the moment a freshman stepped on campus.

At the direction of university President and former Governor of Indiana Mitch Daniels, Schultz’ office began working with Purdue’s Director of Orientation Programs, Kasi Jones, and a newly formed task force within the University Senate’s Equity and Diversity Committee to create a first-of-its-kind free speech orientation presentation for incoming students. The session debuted to great reviews this fall during the first night of Boiler Gold Rush, the university’s weeklong orientation program. (Watch the session in full below, or on Purdue’s YouTube page.)

You know, part of the reason I selected Purdue back in the early seventies was its reputation for concentrating on education, and not all the nonsense which, then as now, liberal politics brings to disrupt one’s education or even completely destroy it.

A while back, Purdue entered a partnership with Kaplan University to widen it’s exposure to adult education – something that has always been in its mission statement as a land grant university. That partnership led to Purdue buying Kaplan. Adam Rusch writing in The Federalist tells us about it.

Mitch Daniels, the president of Purdue University, shocked the world of higher education on April 27 by announcing the public institution has agreed to purchase Kaplan University. Kaplan is a for-profit school that primarily caters to working adults seeking professional degrees online.

It is really more of an invited corporate takeover than a purchase, with only $1 paid to acquire the assets. In return, Graham Holdings, the current owner of Kaplan, will get a long-term contract to provide marketing, student and faculty support, and technology services for a share of the revenue.

On the surface, the schools could not seem more different. Purdue is an elite public Reseach-1 institution whose faculty received more than $400 million last year in external grant funds. Most undergraduates enroll straight out of high school, and the graduate students are among the top in the world. Best known for its engineering and technology programs, notable alumni include Gus Grissom, Neil Armstrong, and Brian Lamb. […]

Creating a vehicle that provides practical education to the masses is not a new problem. In fact, it is the very problem that Purdue and other land-grant universities were created to solve in the mid-1800s. The Morrill Act of 1862 turned over federal land to the states so proceeds from their sales could be used to establish colleges that focus on agricultural, mechanical, and “practical education” without excluding the liberal arts. Since 1914, land-grant schools have also run the cooperative extension offices in their states to provide agricultural and consumer continuing education, including the 4-H program for youth.

Read it all, this is the backstory to the Purdue University Global whose ads we have all been seeing. I’d call Mitch Daniels a worthy successor to the many great Presidents Purdue has had.

Success brings problems though. Katherine Tmpf writing in National Review tells us about one at Purdue.

[P]hotos of temporary dorm rooms at Purdue University have prompted people to compare the living spaces to “boot camp” and “prison” — and that’s absolutely ridiculous.

The dorms in question are temporary living spaces that house eight to ten students, according to an article in BuzzFeed. They made news when a student-run paper, Purdue Exponent, posted a photo of them on Instagram.

“Faced with an excess of admitted students, Purdue University Residences continues to place some students in makeshift rooms in the basements and study lounges of residence halls around campus, like these in Shreve and Meredith residence halls,” the Instagram caption stated. [..]

Yeah, well, I lived in Shreve Hall for two years, that furniture is the standard stuff we had, and it is amazingly versatile, probably because it was designed by Purdue undergraduate engineers.

I’ve personally never been to prison (not to brag) but I have seen a lot of Lockup, and I know that prisons are far worse than what’s on offer at Purdue. In prison, there are little tiny toilets in the corners of the rooms, and you’re forced to use them in front of other people — some of whom may be vicious murderers, which I’m guessing these other Purdue students are not. In prison, one of your walls is a cage. You’re not allowed to bring the blanket that your grandma knitted for you to snuggle under to sleep at night. Also, it is my understanding that when you’re in prison you’re not allowed to just leave your room whenever you feel like it. Honestly, the fact that I even have to point out these differences is so absurd that I feel like my head is going to explode. Daring to compare these dorms to prisons is a slap in the face to anyone who is actually incarcerated.

What’s more, these communal rooms actually cost far less than the typical student housing at Purdue. Beth McCuskey, the vice provost for student life at Purdue, told BuzzFeed that the students in these rooms pay “the absolute lowest rate” that the school offers, which is about $1,200 per semester. (According to Purdue’s official website, the typical cost of housing is $6,714 per year — or more than double that cost.)

And that $1200 per semester is less than I paid in Shreve Hall in 1972. Think about that. A world class University where you can live for the same money as 46 years ago. Whoever is paying that bill must love it. And in truth, unless students have changed, except when we were studying, we were rarely in our rooms anyway, we were down in the lounges interacting with other people.

And Purdue attrits a lot of people, so unless you like it, you’re unlikely to be in these rooms long. Hey, it’s always been a tough (otherwise known as excellent) school.

And football season starts next week!

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