Members of the Harvard community, I’m reaching out about my recent proposal to tax the endowments of the wealthiest universities in our state.
I’m Jay Gonzalez, the Democratic nominee for Governor of Massachusetts. I’m running for Governor to take on the big challenges we face and make Massachusetts a leader again.
Today, too many working families are being left behind. We have a public education system that is failing too many young people. Our transportation system is among the worst in the country and impacts our quality of life every day as we are stuck in traffic or on disabled trains. Yet Governor Charlie D. Baker ’79 is satisfied with the status quo.
I’m not. That’s why I’ve proposed investing significant new resources into our education and transportation systems, starting with a modest tax on the robust endowments of the wealthiest private colleges and universities in Massachusetts.
As Governor, I’d file legislation to raise an additional $1 billion annually through a 1.6 percent tax on the value of endowments exceeding $1 billion. There are currently nine colleges and universities impacted with combined endowments totaling over $65 billion. Harvard University has a $39 billion endowment and does not pay income tax. One report estimated that Harvard University, with an endowment of more than $30 billion, received the equivalent of $48,000 in taxpayer subsidies for each of its 6,700 undergraduate students. I strongly believe we need to do more to help students attending our public colleges and universities, particularly because they are the ones most likely to stay and live in Massachusetts after graduation.
Some have pushed back, saying that Harvard’s robust endowment is used to fund financial aid to needy students. To put that argument in perspective, Harvard and other wealthy universities pay more in endowment management fees than they invest in scholarships for low-income students.
And even after Harvard and other universities invest endowment resources in financial aid and all of the important work they do, their endowments have still grown at an average annual rate of 4.8 to 8.4 percent over the last 15 years. Therefore, a modest tax of 1.6 percent should allow Harvard to keep doing everything it does today while still growing its endowment at a rate that far exceeds inflation.
I understand that this proposal comes at a time when higher education institutions feel under siege. Admissions policies are being challenged, competition for students and faculty is intense and growing internationally, and President Donald Trump and Republicans in Congress attack, rather than support, your community.
I want to be clear: I support and appreciate you and the incredible institution you work for and attend. We’re fortunate to have Harvard University in Massachusetts. It helps drive our knowledge-based and innovation-oriented economy. But as important as Harvard and the other impacted colleges and universities are to our state, our most important asset is our people. I am running for Governor to make a difference for all the working families being left behind. The people of Massachusetts are my top priority.
I know it’s controversial. But we all have an obligation to ensure that we are building an economy that works for everyone in our state, not just those at the top. My endowment tax proposal is fair, and it’s the right thing to do. The new tax revenue will result in a better-educated and more mobile workforce, a stronger economy, and a better quality of life for working families being left behind.
Jay Gonzalez is the Democratic nominee for Governor of Massachusetts.
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