Meeting Public Comments

Rick A [me]

This seems like an excessive tax. It is 15% of value all real and personal property not 15% of income. The taxing of value at a rate that far exceeds what can be expected as the return on that endowment stikes me as unfair and threatens to kill the golden goose.We do tax property value, but at less than 2% (the average being around 1.5% in Iowa). And we do tax income at rates with 15% being not uncommon. But if you tax income at 15% we get to keep 85% (which none of us is happy about we want to keep it all!), and we get to keep all our assets (less the 1.5% property tax). But if you tax a person's net worth they lose net worth unless their return on that worth exceeds the tax. So tax an endowment at 15% every year then you drain the endowment unless they earn more than 15%. And the more they have over 250 million (which is exempted) the faster they drain.For example, if a college has 536 million in endowment, and earns 8% ROI (about the national average), then they will earn about 43 million in a year. But the tax is on the overage of 286 million (i.e. 536 minus 250). And 15% of 286 million is 43 million. No gain. Every penny earned is paid in tax. And the college is unable to pay operating expense out the endowment unless they take it from the principle. The endowment gets drained, or tuition increases bringing down enrollment etc. etc. And endowments over 536 million are drained faster. (Because they can't realistically earn 15% on their endowment, and the 250 million exemption is a smaller percentage of their endowment value). Endowments between 250 and 536 can grow (assuming an 8% ROI) but only if they scale back on operations support, and even then at a much slowed rate. I suggest that it is virtually a cap on endowment value.Does that seem fair?