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Two Massachusetts lawmakers proposed a bill which would impose an annual excise tax of 2.5 percent on Harvard’s endowment.
The bill – titled An Act to Support Educational Opportunity for All – affects private educational endowments greater than $1 billion.
Given Harvard’s $50.7 billion endowment, per October’s Annual Financial Report, Harvard would be one of eleven Massachusetts private schools subject to the endowment tax. According to Bloomberg News, the tax would generate approximately $1.2 billion from Harvard, which would fund statewide education intitiatives.
Representative Natalie M. Higgins of Leominster – one of the bill’s two sponsors, along with Representative Christine P. Barber of Somerville – said the motivation for the bill was to increase educational access.
“We’re not targeting these institutions because they are higher ed institutions. We are really redirecting this money, just to make sure that every single person in the Commonwealth has the opportunity to get a college education,” Higgins said.
Higgins said that while over half of Massachusetts residents hold a bachelor’s degree, less than a third of her constituents in Leominster have access to a degree, — a demonstration of the educational inequality the bill aims to mitigate.
“We have a really tough history and reality of wealth inequality in Massachusetts,” Higgins said.
Higgins added that an endowment tax would boost the state’s economy.
“If we have more students being able to go and get a college degree and contribute to the Commonwealth, and if we have more families able to access childcare without worrying about how they’re going to make ends meet, it’s going to benefit the entire state,” she said.
Though Higgins said the tax “absolutely would not be an attack on higher education,” she added that wealthy universities “operate using a whole lot of privilege and access to resources that most other communities don’t have.”
Sonya Hagopian, Vice President for Communications at the Association of Independent Colleges and Universities in Massachusetts, wrote in an emailed statement that the proposed tax “would undermine the fiscal health of the higher education sector.”
“Colleges and universities increasingly rely on philanthropy and endowments to keep tuition down, provide financial aid, drive research and innovation, and support public and community service,” Hagopian wrote. “Targeting them will have the exact opposite effect for affordability and access.”
Harvard’s Office of Treasury Management declined to comment on the State House bill. Harvard leadership has historically opposed endowment taxes, arguing that such taxes are a “blow at the strength of American higher education.”
A University spokesperson declined to comment.
Rather than further taxing private endowments, Hagopian said that the state should invest in “need-based financial aid programs.”
Higgins said that the tax would “make sure that every single resident in Massachusetts could have access to a college degree.”
“Our bill would raise enough money to make it completely free to go to any of the 29 public colleges and universities in Massachusetts, and there would be money left over for early education and care,” Higgins said.
—Staff writer Madeline E. Proctor can be reached at email@example.com.
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