Massachusetts Lawmakers target $1b endowments: Tax Exempt status of schools debated

The Boston Globe reports:

Massachusetts lawmakers desperate for additional revenue are eyeing the endowments of deep-pocketed private colleges to bolster the state's coffers by more than $1 billion a year, asserting that the schools' rising fortunes undercut their nonprofit status.
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Legislators have asked state finance officials to study a plan that would impose a 2.5 percent annual assessment on colleges with endowments over $1 billion, an amount now exceeded by nine Massachusetts institutions. The proposal, which higher education specialists believe is the first of its kind across the country, drew surprising support at a debate on the State House budget last week and is attracting attention in higher education circles nationally.

The idea has prompted a range of questions, including whether it is legal to infringe upon private colleges' tax-exempt status or single them out based on their wealth. It also faces significant opposition from the colleges and some skeptical lawmakers.

But proponents say the colleges' vast accumulations of wealth - Harvard University has the biggest endowment at $34 billion - and their often modest contributions to their host communities justify the assessment.

"When is a nonprofit not a nonprofit because of the wealth they are acquiring?" said Representative Paul Kujawski, a Democrat from Webster and chief backer of the legislation.

"It's mind boggling that one entity not paying taxes has $34 billion. How do you justify that?" said Kujawski, who serves on the influential House Ways and Means Committee. "When people can't afford to live. How do you justify not taxing them?"

University leaders criticized the plan as a gimmick that would backfire by hurting institutions that are pivotal to the state.

"You'd be taxing success here," said Kevin Casey, Harvard's associate vice president for government, community, and public affairs. "Over time, this would put us at a real competitive disadvantage, which would drastically hurt the Commonwealth."

Casey said it was understandable that lawmakers would search for new sources of revenue when economic times are tough. But he said the law would hurt colleges' fund-raising and financial aid initiatives.

You'll want to read the whole article.Marxism for people who like Marxism.After decades of promoting socialism for everyone outside academia,socialism has finally come back to bite Harvard and gang.Harvard has more money than most S&P 500 companies but wants everyone else to pay their "fair share".This really puts John Rawls' Theory of Justice in bold relief.We can't wait to hear tenured Marxists sound like members of Mises Institute in defending Harvard's favorite marginal tax rate:0%.We doubt Harvard's going to lose their tax free status from the state of Massachusetts but the U.S. Congress may take it away within the next ten years.