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"Shock Exchange" Author Says Congress Plagiarized Idea To Tax College Endowments PDF Print E-mail

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Orrin Hatch, Paul Ryan eating off inner-city black kids' plates?

The cost of college has been growing at over three times the rate of inflation for over a decade, yet politicians have been loathe to do anything about it. The critically acclaimed, Shock Exchange: How Inner-City Kids From Brooklyn Predicted The Great Recession And The Pain Ahead, recommended taxing colleges with the biggest endowments as a practical plan to tamp down these rising costs. Now Congress is listening. In October Congressman Tom Reed (NY) recommended taxing colleges with the largest endowments. In April the Senate Finance and House Ways and Means committees queried the 56 wealthiest private colleges about the size of their endowments and how they were being managed. However, Congress never cited Shock Exchange as the source of its information. Below is a synopsis of the June 5, 2016 "cease and desist" letter I sent to the House Ways and Means and Senate Finance Committees:

Senator Orrin Hatch -- Chairman, House Committee on Finance

Congressman Kevin Brady -- Chairman, House Committee on Ways and Means

Congressman Peter J. Roskam -- Chairman, House Committee on Ways and Means Oversight Committee

Dear Senator Hatch, Congressman Brady and Congressman Roskam:

I am the author of the critically acclaimed Shock Exchange: How Inner-City Kids From Brooklyn Predicted The Great Recession And The Pain Ahead. The book explains the stock market and U.S. economy through the eyes of the kids of the New York Shock Exchange, a travel basketball team and youth mentorship program based in Brooklyn, NY. I started the program in 2006 to share my passion for basketball and investing with my 11-year-old son and other boys his age.

Library Journal called Shock Exchange, "Innovative ... an intriguing work." Ken Townsend, Elliott Professor of Economics at Hampden-Sydney College exclaimed, "Great book!"

Shock Exchange includes a unique plan to reduce the cost of college by taxing those institutions with the largest endowments. I also explained the need to tamp down the rising cost of college in the article, March 16, 2008: Shock Exchange Profiled In The July Issue Of Black Enterprise, which was incorporated in the book. I understand that Congressman Tom Reed (NY), the House Ways and Means Committee and the Senate Finance Committee have recently recommended a bill or made statements pursuant to taxing college endowments.

According to the Bloomberg article, Richest U.S. Schools Could Lose Tax Status In Endowment Proposal, Congressman Tom Reed has floated a bill to tax colleges with the largest endowments:

A U.S. Congressman is floating an idea that’s likely to find opposition from the wealthiest colleges: devote 25 percent of a school’s annual endowment income for financial aid or lose tax-exempt status.

Almost 100 endowments with assets of more than $1 billion would be required to give that percentage to lower college costs for middle and low-income students, according to a draft congressional bill provided to Bloomberg. If they didn’t comply for three consecutive years, they could lose their nonprofit status.

The bill, aimed at addressing the skyrocketing cost of college, is expected to be introduced during the congressional session that began this month and could undergo changes in the meantime, said Representative Tom Reed, a New York Republican who is sponsoring the proposal. No co-sponsors are attached to the proposal.

I also understand that the Senate Finance and House Ways and Means committees have sent letters to the wealthiest 56 private colleges , including Harvard, Yale, Princeton and Boston University -- the four colleges referred to specifically in Shock Exchange. The letter inquired about how the endowments were being managed, the cost to manage the endowments, the size of the endowments, the percentage of the endowments paid out annually, and the percentage of endowments devoted to financial aid, amongst other things.

In the past I sent Shock Exchange to several senators and congressmen in New York and other states, including certain members of the Senate Finance and House Ways and means committees. That said, the proposed bill, letters and statements by Mr. Reed, the House Ways and Means Committee and Senate Finance Committee  to tax colleges with the largest endowments appear to have been taken verbatim from my book. Below is an excerpt from Shock Exchange:

Almost four years after the Shock Exchange's post on the spiraling cost of college, nothing has been done to stem the crisis. A college education is an inelastic good  -- despite spiraling costs, students will still attend, and borrow to do so. The amount of outstanding student loans has practically made U.S. graduates indentured servants. The New York Federal Reserve estimates there are $550 billion in outstanding student loans while Fannie and Freddie put the figures closer to $760 billion. Moreover, the figure could top $1 trillion shortly ...

Apparently there is a method to the madness of college tuitions. Colleges are spending millions in order to bribe the best students to enroll. It is the equivalent of Nike or Reebok-sponsored AAU teams handing out sneakers, backpacks, and iPods, and free trips to Vegas to entice the best players. By turning grassroots basketball into an arms race, they have weeded out the "old ball coach" who preaches discipline and fundamentals. How long will it be before college too deteriorates from a sanctuary where students undergo rigorous training, to a cesspool of bribes? Or has it?... The "game" is to attract enough students to apply to one's college (with no intention of admitting them) and then deny their applications. The more students the college rejects, the lower its "acceptance rate" and the more "exclusive" it appears ...  The luxury arms race that colleges are engaging in is evidence of traditional not-for-profit entities behaving in a "for profit" manner. The Harvards and Yales of the world have the largest endowments and therefore, the necessary war chest to compete based on spending ...

The institutions that sell luxury suites, saunas and gourmet meals and offer a college degree as an ancillary service, price out the masses and hurt our country's competitiveness. The best solution to institutions that act in a "for-profit" manner is to tax them at the same rate as other spas, real estate developers, and fine dining establishments.

This letter is to advise you that you are using copyrighted and protected material either in print form, digitally, on your website/blog or other means ... 

On Shock Exchange  

With the critically acclaimed, Shock Exchange: How Inner-City Kids From Brooklyn Predicted The Great Recession And The Pain Ahead, author Ralph W. Baker, Jr. predicted the current global economic slow down, the demise of China, emerging markets and the pending stock market crash.

Where to Buy:

"Shock Exchange" is available electronically through Barnes & Noble (NOOK), Amazon (Kindle), iTunes, etc. The print version is available through the following retailers and bookstores:  

Print Version: 

Amazon http://www.amazon.com/

Barnes & Noble online http://www.Barnesandnoble.com

Hampden-Sydney College Bookstore: http://cougar.hsc.edu/cgi-bin/main_inv.exe , item number: 38561. Or call Jason Huskey at 434-223-6117.

 

 

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