Endowment Tax Proposal Represents New Attack on Harvard, Higher Ed
Last week, Massachusetts Democratic gubernatorial nominee Jay Gonzalez gave a speech in Harvard Square endorsing what was once a fringe concept — a tax on the endowments of institutions of higher learning — that is now becoming more mainstream. Gonzalez proposed a 1.6 percent tax on private, non-profit colleges and universities in the state with endowments over $1 billion, which would cost Harvard over $500 million — well over the projected $43 million that would have gone to the federal government in 2017 if the federal government had taxed the endowment. This is because Gonzalez’s plan — unlike the one passed by Congress — taxes all endowment assets instead of just the income garnered from them.
In light of this new proposal, our opinion on the matter remains unchanged. We did not support the tax when Republicans pushed for it at the federal level, and we do not support it now that some Democrats have pushed for it at the state level. The proposal is dangerous and reckless. Indeed, the quick acceptance of endowment taxes in mainstream politics signals a radical, unprecedented attack on higher education, and a worrying reflection of how higher education is perceived in our country.
Ironically, the revenues from the tax are proposed to go towards funding public education. Thus, this proposal creates a tradeoff between one form of education for another — robbing colleges to fund public schools.
The state of Massachusetts has always placed a high premium on education, which is reflected in the stellar status of its public school systems compared to the rest of the nation and its world-class colleges and universities, including Harvard. While Harvard may weather this financial storm because of its hefty endowment, what if this plan cripples a school with a much smaller endowment, like Wellesley?
Additionally, Harvard would not only have to grapple with making massive cuts to already-strained budgets across its schools, but also with the complex logistics surrounding such a tax. Even now, nearly a year after the Republican endowment tax proposal became law, the University still does not know how to file its returns, having received no guidance from the federal government. This dilemma would only become more complicated with a concurrent state-level tax, especially one as massive as the one Gonzalez calls for. The University would waste valuable resources attempting to solve labyrinthine tax problems.
We do sympathize with Gonzalez’s interest in helping public education, though we certainly do not believe the tax is the right way to accomplish it. Whether or not the tax does become law, we believe Harvard should still contribute to Boston-area communities, and particularly to its schools.
This tax represents misguided thinking and a contempt for higher education that is en vogue among politicians. At a time when the work the University does is more important and groundbreaking than ever — making new discoveries, advancing branches of knowledge, and using its tools to help the public — this tax is calculated to destroy Harvard financially and leave it unable to do more. However, perhaps the greatest consequence the proposed endowment tax has on society is its casual dismissal of the important work universities do to change the world for the better.
This staff editorial is the product of discussions at regular Editorial Board meetings. In order to ensure the impartiality of our journalism, Crimson editors who choose to opine and vote at these meetings are not involved in the reporting of articles on similar topics.
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Gonzalez’s Endowment Tax Is a Disgusting Proposal