Ira Stoll (Future of Capitalism), Outgoing Ivy League Presidents Get Sweetheart Home-Loan Deals:
The Philadelphia Inquirer reports on a low-interest loan that the University of Pennsylvania approved to Amy Gutmann as she was leaving the university’s presidency. … This sort of deal is apparently somewhat frequent for outgoing university presidents: “Columbia gave its recently departed president, Lee Bollinger, a $6 million home loan, tax records show. The former president of the University of Southern California, C.L. Max Nikias, also got one for $3 million.”
The Inquirer doesn’t mention it, but, as usual, there is a tax angle. During the Trump administration the government enacted an excise tax equal to the corporate tax rate on non-profit employees earning more than $1 million a year. A below-market-rate loan doesn’t count as “income” under the rule, so the university avoids paying the excise tax. …
[A]n entertaining Congressional hearing would be to call the Penn and Columbia former presidents and trustees in for a session on whether Congress should amend the excise tax provision to have it apply to these sorts of loans. … [T]he next time the university lobbyists show up pleading institutional poverty to ask for more research funding or student loan subsidies, the members of Congress might want to ask a question or two about these sorts of loans.
(Hat Tip: Glenn Reynolds.)
