Gonzalez plan would tap colleges for tax
Calls for levy on endowment funds
Democratic candidate for governor Jay Gonzalez’s $1 billion plans to tax massive college endowments and pump the money into transportation and education got failing grades from an advocacy group for the well-heeled institutions of higher education.
The plan — a 1.6 percent annual tax on endowments holding more than $1 billion — would hit nine schools in Massachusetts: Amherst College, Boston College, Boston University, Harvard University, Massachusetts Institute of Technology, Smith College, Tufts University, Wellesley College, and Williams College.
Led by Harvard’s behemoth $37.1 billion endowment, the handful of schools together hold about $68 billion in the bank.
None of the colleges contacted by the Herald wanted to comment on the plan, but a few referred questions to a state association that panned the tax-and-spend proposal.
“Taxing endowments is bad for students, bad for our economy, and bad for Massachusetts,” Association of Independent Colleges and Universities in Massachusetts president Richard Doherty said in a statement, adding the schools award $608 million in financial aid to state students and spend more than $9 million in salaries each year.
Gonzalez’s plan has echoes of the Republican Party’s recent federal tax overhaul that instituted a new 1.4 percent tax on net investment income for some large college endowments — a proposal then pummeled by Democrats and Gonzalez’s opponent Gov. Charlie Baker.
Baker said yesterday he opposed the GOP’s endowment tax because endowments largely support scholarships and other financial aid to needy students.
“And again, I start with the proposition that when President Trump proposed this idea, I thought it was a bad idea then, and I still think it’s a bad idea,” Baker said.
It’s unclear how Democrats will rally behind Gonzalez’s plan given their opposition to the similar GOP proposal just months ago.
The Massachusetts Republican Party congratulated Gonzalez on outlining how he will raise money for his ambitious $60 billion in new investments, but reprised remarks about the GOP’s plan from U.S. Sens. Elizabeth Warren and Ed Markey to undercut Gonzalez’s plan, which he launched yesterday outside the Harvard T stop.
“These nonprofit institutions have accumulated enormous wealth in part thanks to the fact that they are not subject to taxation,” Gonzalez said.
“We are so fortunate to have these institutions of higher education in Massachusetts,” Gonzalez added. “They are key assets that drive our knowledge base and innovation or economy, but for those colleges and universities who have accumulated enormous wealth, it is time for them to pay their fair share.”