This paper argues that private colleges with substantial endowment wealth have increasingly become ivory tower tax havens. The author, Charlie Eaton, explains that these colleges have been supported by three large federal tax expenditures. The three tax expenditures involve tax deductible donations to endowments, untaxed endowment investment returns, and a complex new financial strategy known as indirect tax arbitrage in which private colleges use tax exempt municipal bond borrowing in place of endowment assets for capital projects.
