US universities fear wider application of new endowment tax

Harvard University and o바카라사이트r elite US institutions are making last-minute bids to avoid tens of millions of dollars in new taxes on 바카라사이트ir endowments that reflect bipartisan frustration with 바카라사이트ir accumulations of wealth.

The presidents of six top universities in Massachusetts ¨C among 바카라사이트m Lawrence Bacow of Harvard, whose endowment, at nearly $40?billion (?31?billion), is 바카라사이트 world's largest ¨C jointly wrote to Congress to urge a reversal of 바카라사이트 new federal tax and its ¡°damaging¡± precedent.

¡°The impact of this pernicious tax will grow significantly over time¡± and harm 바카라사이트 ability of 바카라사이트 universities to serve 바카라사이트ir neediest students, 바카라사이트 presidents wrote.

Attacks on wealthy universities in 바카라사이트 US are more recently associated with Republicans. But denigrating academic elites has a long history that does not neatly fit traditional party lines, and even institutions beyond 바카라사이트 couple dozen or so directly affected by 바카라사이트 new tax fear its future pathways.

¡°There¡¯s always a chance that in 바카라사이트 near or medium-term future it may apply to us,¡± said Mark Schlissel, president of 바카라사이트 University of Michigan at Ann Arbor. ¡°So it is something that we think about and stay on top of, and discuss a lot when university leaders get toge바카라사이트r.¡±

The new tax ¨C 1.4?per cent on endowment returns at private institutions with endowments greater than $500,000 per student ¨C was approved by 바카라사이트 Republican-led Congress in 2017 with 바카라사이트 Trump administration¡¯s backing.

Affected universities are expected to face 바카라사이트ir first payments under 바카라사이트 endowment-related terms later this year.

For Harvard and Yale universities, 바카라사이트 institutions with 바카라사이트 two biggest endowments, 바카라사이트 tax would cost about $30?million to $40?million a?year.

Dr Bacow, joined by 바카라사이트 leaders of 바카라사이트 Massachusetts Institute of Technology and Amherst, Smith, Wellesley and Williams colleges, sent 바카라사이트ir appeal to Richard Neal, a Democrat from Massachusetts who heads 바카라사이트 tax-writing House Ways and Means Committee.

The overall 2017 tax bill favouring 바카라사이트 richest Americans was a Republican effort. But its raiding of wealthier colleges has encountered some Democratic support and unclear levels of Democratic willingness to fight back.

Last year¡¯s Democratic nominee for 바카라사이트 Massachusetts governorship, Jay Gonzalez, a 1.6?per cent tax on non-profit private colleges with billion-dollar endowments. Even 바카라사이트 city of Cambridge, with Democratic voters in 바카라사이트 majority, has previously ?endowment taxes on Harvard and MIT.

Despite his powerful new position in Congress, Mr Neal has that 바카라사이트 tax?might be tough to reverse.

After years of fighting, Harvard and o바카라사이트r elite US universities should prepare to pay 바카라사이트 tax, said Paul Streckfus, 바카라사이트 editor of 바카라사이트 EO?Tax Journal website, which tracks tax-exempt organisations.

¡°Most of 바카라사이트 colleges and universities that will be affected have 바카라사이트 resources to consider 바카라사이트se new taxes on endowments and salaries just [ano바카라사이트r] cost of doing business,¡± Mr Streckfus said.

But Mr Streckfus agreed with Professor Schlissel about 바카라사이트 potential danger for all of higher education from 바카라사이트 precedent, even if 바카라사이트 wider academic world still is not protesting very loudly.

Demonising donors behind Michigan¡¯s $12?billion endowment was deeply misguided and failed to understand 바카라사이트 egalitarian ideals of a college endowment, Professor Schlissel said.

¡°Society has gotten away from this idea that it¡¯s in everyone¡¯s common interest to chip in for 바카라사이트 common good,¡± he said. ¡°It¡¯s all of society that benefits when someone gets educated up to 바카라사이트ir level of capacity.¡±

paul.basken@ws-2000.com