Legacy Admission and Tax Law

Legacy Admission and Tax Law September 19, 2013 Is legacy admission a violation of tax law (photo credit: Pradipta Mitra). What do legacy admission and tax law have to do with each other you ask? Weve written about  legacy admission being a violation of tax law  before but Salon now has an article on the topic so we figured wed touch on it once more. In an article entitled The 1 percents Ivy League loophole by Elizabeth Stoker and Matthew Bruenig, the writers state, The Internal Revenue Service does not treat alumni donations as transactional payments. Instead, it treats them as charitable giving. As a result, alumni that make such donations are entitled to deduct the amount of their donation from their income for tax purposes. In so doing, the richest alumni receive a tax subsidy of 40 percent of the amount of their donation. That is, the public ultimately funds as much as 40 percent of any given legacy admissions payment. Its rather absurd when you think about it in these terms, right? The public is providing funding for the children of privileged individuals who had the chance to go to an Ivy League school attend an Ivy League school themselves. And these legacy admits are taking the spots of other applicants. In fact, a legacy applicant by virtue of being the son or daughter of someone who attended that very university has the equivalent of a 160 point boost on a 1,600 point scale on the SAT. Thats how much being a legacy helps! Do you think making tax deductable donations to your alma mater in return for your son or daughter ultimately getting in is a violation of tax law? Let us know your thoughts on this controversial subject by posting a Comment below. We look forward to hearing from you.