What should we make of the idea of taxing the endowments of the top colleges and universities? Depends what the money goes toward, according to Sen. Elizabeth Warren.
Warren slammed the Republican-backed tax bill last year for including a new 1.4 percent tax on the returns from the richest private universities’ endowment investments. The tax, which applied to private universities with endowments worth at least $500,000 per student, hit a number of local schools, including Harvard and MIT, which have endowments worth tens of billions of dollars.
Still, Warren said last November that the notion of imposing a tax on higher education to offset tax cuts primarily benefiting wealthy individuals and corporations was “completely backwards.”
“Nonprofit college endowments should fund things like tuition reduction, basic research, and scholarships for students — not giant tax cuts for rich Republican donors and giant corporations,” she said in a statement to The Boston Globe.
But now, Jay Gonzalez, the Democratic gubernatorial nominee taking on Massachusetts Gov. Charlie Baker, is proposing a similar endowment tax, and Warren isn’t forcefully opposing the idea — though she is hardly embracing it, either.
Gonzalez’s proposal, which was announced Wednesday, would impose a 1.6 percent tax on private college endowment funds worth more than $1 billion, in order to pay for investments in the state’s public education and transportation systems.
According to his campaign, it would effectively apply to nine institutions in Massachusetts — Harvard, MIT, Williams, Boston College, Amherst, Wellesley, Smith, Tufts, and Boston University — and raise around $1 billion in revenue. Gonzalez says the funds would be used to improve the education system, from childcare to public universities and community colleges, and inject new resources into the MBTA, regional public transit, and the state’s roads and bridges.
Kristen Orthman, a spokeswoman for Warren’s re-election campaign, said in a statement the senator applauds her fellow Democrat for starting a “conversation about ways to invest in Massachusetts,” even if she doesn’t necessarily support taxing endowments. In July, Warren told CNBC she would like to see the Republican cuts to the corporate and top marginal incomes tax rates rolled back.
“During the debate on the Republican tax bill, Senator Warren opposed taxing nonprofit colleges to provide billions in giveaways to the wealthy,” said the statement. “She strongly supports investments in affordable education and infrastructure, believes there are a number of ways to do so, and applauds Jay for starting this conversation about ways to invest in Massachusetts.”
Sen. Ed Markey has taken a similar noncommittal stance
“Senator Markey thanks Jay Gonzalez for starting this important discussion and highlighting the priorities that Republicans refuse to invest in,” Giselle Barry, a spokeswoman for Markey’s office, told the Globe.
Some local Democrats have come out in support of taxing the endowments of top colleges, including a few officials in Harvard and MIT’s backyard. Boston City Councilor Ayanna Pressley, the presumptive incoming congresswoman in the 7th District, told the Globe that “the wealthiest private institutions must do more to support the communities they call home.” Cambridge Mayor Marc McGovern also spoke out in support of the tax.
“Universities and colleges with endowments in the billions of dollars – including those in the city where I am proud to be Mayor – can and should be contributing more to help the regular people who are struggling to get ahead in Massachusetts,” McGovern said in a statement provided by Gonzalez’s campaign.
Baker, however, was a bit less receptive to his opponent’s plan, ripping the endowment tax as a “bad idea.”
“I start with the proposition that when President Trump proposed this idea, I thought it was a bad idea then, and I still think it’s a bad idea,” he said Wednesday, according to the State House News Service.