Tag: Boston College

State Schools Kill Big East, Private Hoops in Critical Condition

A couple of years ago I predicted it (though I was hardly the only one): Darwinian conference predation, driven by football and the quest for television markets and money, would kill the Big East, and at least seriously hamstring the small, basketball-centric private colleges that made up so much of it. Huge, flagship public universities would consolidate power in service of football, I and others foresaw, and relatively small schools like Georgetown, Villanova, and St. John’s – which could never produce enough alums to regularly fill even close to 80,000-seat football stadiums – would be orphaned.

With the departure of the University of Pittsburgh and Syracuse to the Atlantic Coast Conference, that now seems almost unavoidable.

But this isn’t the fault of Pitt and Syracuse, or even the ACC (though perhaps the ACC deserves scorn for its 2003 raid of the Big East, and Pitt for its possible duplicity about its move). No, ultimately it’s the fault of a higher education system that gives flagship state schools massive size advantages over private institutions both physically and in terms of enrollment. (Though all of higher ed, of course, is awash in taxpayer dough.) This advantage is primarily thanks to taxpayer subsidies, which underwrite the schools’ gigantic enrollments and, too often, their athletics programs directly. So the ACC was largely reacting to moves by what’s now the PAC-12, the so-called Big 10 (which also has twelve members), and the impending destruction of the Big 12 thanks to the inability of two behemoths – the University of Texas and Texas A&M – to get along.

Indeed, in the grand scheme of big-time college sports, the ACC is the most friendly of the emerging ”superconferences” to private schools; with the addition of Syracuse it will have five of them, the others being Duke, Wake Forest, Boston College, and the University of Miami.  But it will almost certainly be considered the weakest of the superconferences in football, and if you look at the latest Sagarin ratings of the ACC schools, note the cellar-dwellers: Wake, Duke and Boston College.

This is depressing if you enjoy high-level, private school hoops. Of course, a few football-free private schools do enjoy regular success – Xavier, Gonzaga, and most recently Butler – but their resources are significantly smaller than the members of the current Bowl Championship Series conference schools, with lucrative BCS television contracts tied, first and foremost, to football.  So with the likely demise of the Big East, the going is likely about to get much tougher for the likes of Seton Hall, Providence, and other Big East, hoops-only schools, even if they are able to hang on to relevance.

Is federal anti-trust action needed to deal with this, as some have suggested? I’m no anti-trust expert, but I’d say absolutely not. For one thing, when this has been threatened before it has had little to do with fair competition, and much to do with federal legislators trying to get the flagships in their states in on the BCS. That will do private schools little good, and hardly seems motivated by a real desire for fair competition or justice. We should also hope that Congress will focus on other, more important things, like, say, getting Washington back to its proper constitutional size. And most important, attacking the BCS will do little to address the fundamental problem: As long as states furnish huge subsidies to public universities, those institutions will always have a massive size advantage is the world of college sports.

So good-bye, Big East. Government schools have killed you. 

Class Warfare Tax Policy May Be Emotionally Satisfying to Some People, but It Is Bad Economics

Barack Obama wants higher tax rates on the so-called rich, including steeper levies on income, capital gains, dividends, and even death. Along with other politicians in Washington, he acts as if successful taxpayers are like sheep meekly awaiting slaughter. I’ve explained in this video why class-warfare tax policies are misguided, and a new study from Boston College provides additional evidence about the consequences of hate-and-envy tax policy. The research reveals that high tax rates in New Jersey have helped cause wealthy people to leave the state, leading to a net wealth reduction of $70 billion between 2004 and 2008. Wealth and income are different, of course, so it is worth pointing out that another study from 2007 estimated that the state lost $8 billion of gross income in 2005. That’s a huge amount of income that is now beyond the reach of the state’s greedy politicians. Here’s a report from the New Jersey Business News:

More than $70 billion in wealth left New Jersey between 2004 and 2008 as affluent residents moved elsewhere, according to a report released Wednesday that marks a swift reversal of fortune for a state once considered the nation’s wealthiest. …The exodus of wealth…was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes. …the report reinforces findings from a similar study he conducted in 2007 with fellow Rutgers professor Joseph Seneca, which found a sharp acceleration in residents leaving the state. That report, which focused on income rather than wealth, found the state lost nearly $8 billion in gross income in 2005. …Ken Hydock, a certified public accountant with Sobel and Company in Livingston, said in this 30-year-career he’s never seen so many of his wealthy clients leave for “purely tax reasons” for states like Florida, where property taxes are lower and there is no personal income or estate tax. In New Jersey, residents pay an estate tax if their assets amount to more than $675,000. That’s compared to a $3.5 million federal exemption for 2009. Several years ago, he recalled, one of his clients stood to make $60 million from stock options in a company that was being acquired by another. Before he cashed out, however, the client put his home up for sale, moved to Las Vegas, and “never stepped foot back in New Jersey again,” Hydock said. “He avoided paying about $6 million in taxes,” he said. “He passed away two years later and also saved a huge estate tax, so he probably saved $7 million.”

Still not convinced that high tax rates are causing wealth and income to escape from New Jersey? The Wall Street Journal wrote a very powerful editorial about the Boston College study, noting that New Jersey “…was once a fast-growing state but has now joined California and New York as high-tax, high-debt states with budget crises.” But the most powerful part of the editorial was this simple image. Prior to 1976, there was no state income tax in New Jersey. Now, by contrast, highly-productive people are getting fleeced by a 10.75 percent tax rate. No wonder so many of them are leaving.