The Tax Reform Act of 1986 has become law. The deed is done, for universities and everyone and there seems little further point in arguing over probable effects. The question that remains is why, at a time when Congress is concerned about preserving the nation's economic competitiveness and technological leadership, did it choose to withdraw significant tax advantages from universities, institutions which, given the way American science is organized, are essential to these goals?

The two most serious losses are certainly in the areas of the deductibility of charitable giving and the ability to issue tax-exempt bonds to finance capital costs of construction and renovation of research facilities. Private fund raising is the major tool that universities, public and private, have at their disposal to improve the quality of teaching and research without additional cost to their students or the taxpayers. The best economic models we have suggest that charitable...

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