Endowment Tax Could Affect Harvard's Pension Investments

The Harvard Crimson reports:

The Republican tax overhaul passed in December may affect the pensions of Harvard employees hired before 2001 and the University is currently “reviewing” the situation, according to a Harvard spokesperson.

Last December, Republican lawmakers passed tax legislation requiring private colleges with endowments greater than $500,000 per student to pay a 1.4 percent tax on annual endowment returns. Harvard numbers among the 35 institutions affected, and would have paid $43 million under the tax if the legislation had existed in fiscal year 2017.

The bill could potentially affect the University’s pension investments, which currently serve many retired Harvard affiliates as well as current employees hired before 2001. University spokesperson Vanessa McMillan wrote in a statement that the impact of the endowment tax on these pensions is still unclear.

“Harvard is aware there is concern that the net investment income tax could potentially apply to pension/retirement investments,” she wrote. “We are examining the issue and awaiting IRS guidance.”

In 2017, Harvard paid a total $64.7 million in pension and post-retirement health benefits and held $836 million in pension assets, according to the financial report for fiscal year 2017.

Harvard socialists show concerns that they will have less money to promote socialism.