How Charitable Are Private Schools?

Depends: do smart, needy kids get scholarships so that parents of rich, not-so-smart kids will shell out more?

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Private schools provided superlative educations to some of the Web's most influential and prolific bloggers. So why are Matt Yglesias and Felix Salmon, graduates of the Dalton School and Dulwich College respectively, arguing that their alma maters' tax-exempt status should be revoked?

It all turns on the question of whether private schools provide enough of a public service to be treated like charitable institutions. Salmon argued that universities, unless they "can demonstrate that they're actually spending their money on the public good," should have their sometimes gargantuan endowments taxed. He qualified:

No one's asking to abolish private schools, or even proposing that most of them lose their charitable status.

Many readers vehemently disagreed.

This entire Salmon position and post are an unwashed attempt at class warfare...
If you want the rich to pay more taxes just say so - don't dress it up in some "help the poor get educated" type bandwagon...
This proposal appears to be motivated by pure malice. Some people dislike elite schools and want to hurt them by any means available...

So why do privately-educated pundits think private schools should be taxed?

  • Diverts Resources from Public Schools, says Matthew Yglesias at Think Progress. "Their main impact on the common weal is negative, drawing parents with resources and social capital out of the public school system and contributing to its neglect."
  • Steals Good Students says Felix Salmon in a follow-up post. "To put it in economist-speak, private schools inflict a negative externality on the quality of education in the neighboring state-run schools."
  • Pretends to Be Altruistic, argues the anonymous UK blogger Hundred Pockets in an elaboration on a comment at Salmon's blog. "Schools can charge higher fees to the parents of rich, dumb kids, if they offer free places to smart, poor kids. Why? Because peer groups matter, and parents know it." He then elaborates in a follow-up post, explaining that private schools are like clubs that pay models to attend so they can "charge more money to schlubs who want to dance Where The Pretty People Are."

Apart from vociferous reader reactions, Adam Schaeffer of the libertarian Cato Institute mounts the best opposing view to these pundits, whom he calls "ingrates." Far from costing taxpayers, he says, private schools are a boon to public coffers:

They complain about the lost tax revenue while dismissing out of hand the billions of dollars that parents and donors spend every year to educate children outside the government system.
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